Lithuanian civil code

CHAPTER I

CIVIL LAWS AND THE RELATIONSHIPS THEY REGULATE

Article 1.1. Relationships regulated by the Civil Code of the Republic of Lithuania

The Civil Code of the Republic of Lithuania shall govern property relationships and personal non-property relationships related with the aforesaid relations, as well as family relationships. In the cases provided for by laws, other personal non-property relationships shall likewise be regulated by this Code.

The provisions established by this Code shall apply to property relationships based on the legal subordination of persons to state institutions and directly resultant from their exercise of functions of state power (realization of subordination), or from the performance of persons’ obligations established by laws towards the state, or from the infliction of administrative or criminal sanctions established by laws, including relationships in the field of taxation and other obligatory payments or dues to the state or to its institutions, also in the field of the state budget, as well as to any other relationships governed by the provisions of public law to the extent that these relationships are not regulated by the relevant laws, also in the cases when it is expressly prescribed by this Code.

Labour relationships shall be regulated by special laws. The provisions of this Code shall apply to labour relations to the extent that they are not regulated by special laws.

Article 1.2. Principles of legal regulation of civil relationships

Civil relationships shall be regulated in accordance with the principles of equality of their subjects’ rights, inviolability of property, freedom of contract, non-interference in private relations, legal certainty, proportionality, and legitimate expectations, prohibition to abuse a right, as well as the principles of comprehensive judicial protection of civil rights.

No civil rights may be limited, except in the cases established by laws, or on the basis of a court judgment made in accordance with laws, where such limitation is necessary to protect public order, the principles of good morals, likewise the health and life of people, property of persons, their rights and lawful interests.

Article 1.3. Sources of civil law

The sources of the Civil law shall be the Constitution of the Republic of Lithuania, the present Code, other laws and international treaties of the Republic of Lithuania.

In the eventuality of contradictions between the present Code and other laws, the provisions of this Code shall apply, except in cases where this Code gives priority to the provisions of other laws.

Civil relationships may be regulated by the decisions of the Government and legal acts of other state institutions only in the cases and to the extent expressly indicated by laws. Where legal acts of the Government or those of the other state institutions contradict the provisions of the present Code or the norms of other laws, the provisions of the Civil Code, or those of the other laws shall prevail.

A court has the right to declare a legal act or a part thereof void if it contradicts the Civil Code or another law in those cases where the supervision of the conformity of this act to the Constitution or to other laws is not within the competence of the Constitutional Court. The court, having recognized such a legal act to be void, shall within 3 days send a copy of its judgement to the institution or the official that has passed the legal act concerned. The res judicata court judgement shall be published in “Valstybės žinios” (“The Official Gazette”).

Article 1.4. Customs

In the cases established by laws or agreed on in contracts, civil relationships shall be regulated by customs.

Customs may not be applied if they are contrary to the mandatory legal norms or to the principles of good faith, reasonableness and justice.

Article 1.5. Application of the criteria of justice, reasonableness and good faith

In exercise of their rights and performance of their duties, the subjects of civil relationships shall act according to the principles of justice, reasonableness and good faith.

In the cases when laws do not prevent subjects of civil legal relationships from determining their mutual rights and duties upon agreement between themselves, these subjects shall act in accordance with the principles of justice, reasonableness and good faith.

If laws or an agreement between the parties provide for certain issues to be decided by a court according to its discretion, the court shall act in accordance with the principles of justice, reasonableness and good faith.

In interpreting and applying laws, the court shall be guided by the principles of justice, reasonableness and good faith.

Article 1.6. Ignorance of laws or improper understanding thereof

Ignorance of laws or improper understanding thereof shall not exempt from the application of the sanctions established therein, and shall not justify the failure to comply with the requirements of laws, likewise improper compliance therewith.

Article 1.7. The effect of civil laws

Civil laws and the other legal acts regulating civil relationships shall enter into force only upon their publication within the procedure established by the laws.

Article 1.8. Analogy of a statute and law

Civil relationships not regulated by the norms of the Civil law shall be governed by civil laws that regulate similar relationships (analogy of statute).

In absence of relevant civil laws regulating similar relationships, general principles of law shall be applied (analogy of law).

Special norms, i.e. those establishing exceptions to general rules, may not be applied by analogy.

Article 1.9. Principles of interpretation of the Civil Code provisions

In order to ensure the integrity of the present Code and the conformity of its separate structural parts, the provisions of this Code in the process of their application shall be interpreted by taking into account the structure and system of this Code.

The words and word combinations used in this Code shall be interpreted according to their general meaning, except in those cases where it is clear from the context that a word or word combination is used in a special – legal, technical or any other – meaning. In the cases of non-conformity between the general and the special meaning of a word, priority shall be given to the special meaning.

In determining the right meaning of an applicable norm, the purposes and tasks of the Civil Code and the norm concerned shall be taken into consideration.

CHAPTER II

PRIVATE INTERNATIONAL LAW

SECTION ONE

GENERAL PROVISIONS

Article 1.10. Application of foreign law

Foreign law shall apply to civil relationships where it is so provided for by the international treaties of the Republic of Lithuania, agreements between the parties or the laws of the Republic of Lithuania.

A reference to foreign law shall include all the provisions applicable to the facts of a case under that law. The application of a provision of foreign law may not be precluded solely because of the provision being attributed to public law.

A reference to an applicable foreign law means a reference to the national material law of the state concerned, but not a reference to the private international law of that state, except in cases provided for by this Code.

Where the legal system of the state to which the renvoi is made by the provisions of this Code comprises different legal systems based on the criteria of division into several territorial units, a reference to an applicable foreign law shall mean a reference to the legal system of the relevant territory determined in accordance with the criteria established in the law of that foreign state.

Where the legal system of the state to which renvoi is made by the provisions of this Code comprises several legal systems applied to different categories of persons, the applicable legal systems shall be determined in accordance with the criteria established in the law of that foreign state.

Where the criteria foreseen in paragraphs 4 and 5 of this Article may not be identified within the scope of the applicable foreign law, the law of the legal system to which the relevant case is most closely connected shall apply.

Article 1.11. Limitation of the application of foreign law

The provisions of foreign law shall not be applied where the application thereof might be inconsistent with the public order established by the Constitution of the Republic of Lithuania and other laws. In such instances, the civil laws of the Republic of Lithuania shall apply.

Mandatory provisions of laws of the Republic of Lithuania or those of any other state most closely related with a dispute shall be applicable regardless of the fact that another foreign law has been agreed upon by the parties. In deciding on these issues, the court shall take into consideration the nature of these provisions, their purpose and the consequences of application or non-application thereof.

In accordance with this Code, the applicable foreign law may not be given effect where, in the light of all attendant circumstances of the case, it becomes evident that the foreign law concerned is clearly not pertinent to the case or its part, with the case in question being more closely connected with the law of another state. This provision shall not apply where the applicable law is determined by the agreement of the parties.

Article 1.12. Determination of the content of foreign law

In the cases established by the international treaties of the Republic of Lithuania or by the laws of the Republic of Lithuania, the application, interpretation and determination of the content of foreign law shall be performed by the court ex officio (on its own initiative).

In the instances where the application of foreign law is established upon agreement between the parties, the burden of proof in relation to the content of the applicable foreign law in accordance with its official interpretation, practice of application and the law doctrine in the relevant foreign state, shall be imposed on the disputing party that refers to the foreign law. Upon request of the disputing party, the court may provide assistance in collecting information on the applicable foreign law.

If the court or the disputing party that refers to foreign law fails to perform the obligation indicated in paragraphs 1 and 2 of this Article, the law of the Republic of Lithuania shall apply.

In the exceptional cases where it is necessary to take immediate interim measures to protect the rights or the property of a person, the court may decide on the urgent questions by applying the law of the Republic of Lithuania pending the determination of the law applicable to the dispute and the content thereof.

Article 1.13. International treaties

Where the provisions established in the international treaties of the Republic of Lithuania are different from those determined by the present Code and other laws of the Republic of Lithuania, the provisions of the international treaties of the Republic of Lithuania shall apply.

The international treaties of the Republic of Lithuania shall apply to civil relationships directly, except in cases where an international treaty establishes that a special national legal act is necessary for its application.

The provisions of international treaties shall be applied and interpreted in accordance with their international character and the necessity to guarantee a unified interpretation and application thereof.

Article 1.14. Referring back and referring to the law of a third state (renvoi)

If the applicable foreign law refers back to the Lithuanian law, that reference shall be observed only in the instances provided for by this Code or the foreign law.2. If the applicable foreign law refers to the law of a third state, that reference shall be observed only in the instances provided for by this Code or the law of the third state.

If in the matters of determining the civil legal status of a person, the applicable foreign law refers back to the law of the Republic of Lithuania, such reference shall be observed.

Paragraphs 1, 2 and 3 of this Article shall not apply in the instances where the applicable law has been chosen by the parties to a transaction, likewise in determining the applicable law to the form of a transaction and to non-contractual obligations.

Where the provisions of this Chapter provide for the application of an international treaty (convention), the matters of renvoi, i.e. referring back and referring to the law of a third state, shall be decided in accordance with the provisions of the applicable international treaty (convention).

SECTION TWO

Foreign citizens in the Republic of Lithuania shall possess the same civil capacity as the citizens of the Republic of Lithuania. Exceptions to this rule may be established by the laws of the Republic of Lithuania.

The time of birth and death of foreign citizens shall be determined in accordance with the law of the state where was the domicile of the foreign citizens (Article 2.12 of this Code) at the moment of their birth or death.

Stateless persons shall possess the same civil capacity as the citizens of the Republic of Lithuania. Special exceptions to this rule may be established by the laws of the Republic of Lithuania.

The time of birth and death of stateless persons shall be determined in accordance with the law of the state where was the domicile of the stateless persons at the moment of their birth or death.

Civil active capacity of foreign citizens or stateless persons shall be governed by the laws of their state of domicile.

If such persons have no domicile or it cannot be determined with certainty, their legal active capacity shall be determined in accordance with the laws of the state within the territory of which these persons formed a relevant transaction.

If a person has residence in more than one state, the law of the state with which he is the most closely connected shall apply.

The ascertainment of incapacity or limited capacity of foreign citizens and stateless persons with permanent residence in the Republic of Lithuania shall be governed by the laws of the Republic of Lithuania.

A change of domicile shall not affect civil active capacity if that capacity was acquired prior to the change of domicile.

Article 1.17. Prohibition to invoke incapacity

A party to a transaction, who is incapable under the law of the state of his domicile may not invoke his incapacity if he was capable under the law of the state in which the transaction was formed, unless the other party was or should have been aware of the first party’s incapacity under the law of the state of the latter’s domicile.

Provisions of paragraph 1 of this Article shall not apply to family law and the law of succession, as well as to real rights.

Article 1.18. Declaration of foreign citizens and stateless persons to be missing or dead

Foreign citizens and stateless persons shall be acknowledged missing or declared dead in accordance with the law of the state of their last known domicile.

SECTION THREE

LAW APPLICABLE TO LEGAL PERSONS OR ANY OTHER ORGANISATIONS

Article 1.19. Civil capacity of foreign legal persons or any other organisations

Civil capacity of foreign legal persons or any other organisations shall be governed by the laws of the state where these persons or organizations are founded.

If the procedure of founding a foreign legal person or any other organisation has been violated, its civil capacity shall be determined by the law of the state of its actual functioning.

Irrespective of the state of foundation of a legal person or any other organisation, the civil capacity of its subdivisions shall be determined in accordance with the law of the Republic of Lithuania if the head office, principal place of business or other activity of the subdivision is located in the Republic of Lithuania.

Merger, association or transfer of the head office of legal persons or any other organizations, one of which is located in the Republic of Lithuania and the other in a foreign state, shall have effect on their civil capacity in the Republic of Lithuania only if implemented in conformity with the laws of both states concerned.

Article 1.20. Issues regulated in accordance with the applicable law

1.The following shall be regulated in accordance with the applicable law determined in Article 1.19 of this Code:

1) the legal nature (legal form and status) of a legal person or any other organization;

2) foundation, reorganization and liquidation of a legal person or any other organization;

3) the name of a legal person or any other organization;

4) the system and competence of the bodies of a legal person or any other organization;

5) civil liability of a legal person or any other organization;

6) the power to represent a legal person or any other organization;

7) legal effects of the violation of laws or founding documents;

Protection against infringement of the business name of a legal person or any other organization registered in the Republic of Lithuania shall be governed by the law of the Republic of Lithuania.

Article 1.21. Law applicable to the representative offices and branches of foreign legal persons or any other organizations

Representative offices and branches of foreign legal persons or any other organizations registered in the Republic of Lithuania shall be governed by the law of the Republic of Lithuania.

At least one of the persons acting on behalf of a representative office or a branch shall be bound to reside in the Republic of Lithuania.

The rights and obligations (competence) of the persons acting on behalf of a representative office or a branch registered in the Republic of Lithuania shall be determined by the law of the Republic of Lithuania.

Article 1.22. Law applicable to representatives of foreign legal persons or any other organizations and to their civil liability

If the business of a legal person or any other organization founded under foreign law is conducted in the Republic of Lithuania, the civil liability of the persons acting on behalf and in the interests of those legal persons or any other organizations shall be governed by the law of the Republic of Lithuania.

A legal person or any other organization may not claim for annulment or invalidity of a transaction formed by its body or any other representatives in excess of their competence (powers) if the law of the state where the domicile or the head office of the other party to the transaction is located does not provide for any restrictions on their representative powers, unless the other party knew or, taking into account its position and the relationship with the other party, should have known of such restrictions.

Article 1.23. Law applicable to the state and state institutions as well as to local governments and local government institutions as subjects to civil legal relationships

Civil capacity of the state and state institutions as well as those of local governments and local government institutions shall be governed by the law of the state concerned.

SECTION FOUR

LAW APPLICABLE TO FAMILY LEGAL RELATIONSHIPS

Article 1.24. Law applicable to a promise to marriage

A promise to marry and its legal effects shall be governed by the law of the state of domicile of the parties to the promise.

Where the parties to the promise of marriage are domiciled in different states, the promise of marriage and its legal effects shall be governed by the law of the place where the promise was made, or by the law of the state of domicile of one of the parties, or by the law of the state of citizenship of one of the parties, whichever law is most closely related with the dispute.

Article 1.25. Law applicable to the conditions to contract marriage

Matrimonial capacity and other conditions to contract marriage shall be governed by the law of the Republic of Lithuania.

Civil Registration Bureaus of the Republic of Lithuania shall have jurisdiction to perform the registration of marriage if either of the persons intending to marry is domiciled in the Republic of Lithuania or is a Lithuanian citizen at the time of solemnization of the marriage.

Matrimonial capacity and other conditions to contract marriage in respect of foreign citizens and stateless persons without Lithuanian domicile may be determined by the law of the state of domicile of both persons intending to marry if such marriage is recognized in the state of domicile of either of them.

A marriage validly performed abroad shall be recognized in the Republic of Lithuania, except in cases when both spouses domiciled in the Republic of Lithuania performed the marriage abroad with the purpose of evading grounds for nullity of their marriage under Lithuanian law.

Article 1.26. Law applicable to the procedure of contracting marriage

The procedure of contracting marriage shall be determined in accordance with the law of the state where the marriage is solemnized. Marriage shall also be recognized valid if the procedure of its contracting is in compliance with the requirements of the law of the state of domicile of either of the spouses or the law of the state of citizenship of either of them at the moment of solemnization of the marriage.

Article 1.27. Law applicable to personal relations between spouses

Personal relations between spouses shall be governed by the law of the state of their domicile.

Personal relations between the spouses domiciled in different states shall be governed by the law of the state of their last common domicile. Where the spouses have never had a common domicile, the law applicable to their personal relations shall be the law of the state to which the personal relations between the spouses are the most closely related. Where it is not possible to determine to the law of which state the personal relations between the spouses are the most closely related, the law of the state where the marriage was solemnized shall apply.

Article 1.28. Law applicable to matrimonial property relations between spouses

The matrimonial property legal regime shall be governed by the law of the state of domicile of the spouses. Where the spouses are domiciled in different states, the law of their common state of citizenship shall apply. Where the spouses have never had a common domicile and are citizens of different states, the law of the state where the marriage was solemnized shall apply.

The law applicable to contractual legal regime of matrimonial property shall be determined by the law of the state chosen by the spouses upon agreement. In this event, the spouses may choose the law of the state in which they are both domiciled or will be domiciled in future, or the law of the state in which the marriage was solemnized, or the law of the state a citizen of which is one of the spouses. The agreement of the spouses upon the applicable law shall be valid if it is in compliance with the requirements of the law of the chosen state or the law of the state in which the agreement is made.

The applicable law chosen upon agreement of the spouses may be invoked against third persons only if they knew or should have known of that fact, i.e. if the third party knew or should have known the chosen law that governed the matrimonial property regime when the legal relationship commenced.

The applicable law chosen upon agreement of the spouses may be used in resolving a dispute related to real rights in immovable property only in the event if the requirements of public registration of this property and of the real rights therein, as determined by the law of the state where the property is located, were complied with.

Any agreed change of matrimonial property legal regime shall be governed by the law of the state of domicile of the spouses at the time of the change. If the spouses were domiciled in different states at the time of change of the matrimonial property legal regime, the applicable law shall be the law of their last common domicile, or failing that, the law governing matrimonial property relationships between the spouses.

Article 1.29. Law applicable to separation and dissolution of marriage

Separation and dissolution of marriage shall be governed by the law of the spouses’ state of domicile.

If the spouses do not have their common domicile, the law of the state of their last common domicile shall apply, or failing that, the law of the state where the case is tried.

If the law of the state of common citizenship of the spouses does not permit a dissolution of marriage or imposes special conditions for dissolution, the dissolution of marriage may be performed in accordance with the law of the Republic of Lithuania if one of the spouses is also a Lithuanian citizen or is domiciled in the Republic of Lithuania.

Article 1.30. Jurisdiction in the cases of annulment, dissolution of marriage and separation

The courts of the Republic of Lithuania shall have jurisdiction over actions of annulment, dissolution of marriage or separation in the cases provided for by the Code of Civil Procedure of the Republic of Lithuania.

Article 1.31. Law applicable to the ascertainment of the origin of a child (legitimation)

The origin of a child (ascertainment or contest of paternity or maternity) shall be established either in accordance with the law of the state the citizenship of which the child acquired at his birth, or with the law of the state which is recognized as the domicile of the child at the time of his birth, or with the law of the state in which one of the child’s parents is domiciled, or with the law of the state the citizen of which one of the parents was at the time of the child’s birth, whichever is more beneficial to the child.

The consequences of legitimation shall be governed by the law of the state of domicile of the child.

If a child or one of his parents is domiciled in the Republic of Lithuania, the questions of legitimation shall be decided by the courts or other state institutions of the Republic of Lithuania.

The parents’ (the father’s or the mother’s) legal active capacity in acknowledging paternity (maternity) shall be governed by the law of the state of his or her domicile at the time of the acknowledgement. The form of the acknowledgement of paternity (maternity) shall be governed by the law of the state in which it is made or by the law of the state of the child’s domicile.

The provisions of this Article shall also apply to the legitimation of a child born out of wedlock.

Article 1.32. Law applicable to relations between the parents and the child

Personal and property relationships between the parents and the child shall be governed by the law of the state of the child’s domicile.

If neither parent is domiciled in the state of the child’s domicile, while the child and the parents are citizens of the same state, the law of the state of their common citizenship shall apply.

Article 1.33. Law applicable to adoption relationship

Relationships of adoption shall be governed by the law of the state of the child’s domicile.

Where it becomes evident that the adoption performed according to the law of the state of the child’s (the adoptee’s) domicile will not be recognized in the state of domicile or citizenship of the adoptive parents (adoptive parent), the adoption may be performed pursuant to the law of the state of domicile or citizenship of the adopter (the adopters) if this will not prejudice the best interests of the child. If the recognition of adoption remains uncertain, the adoption shall not be allowed.

Relations between the adopted person (the adoptee) on the one side, and the adopting persons (the adopters) and the relatives of the latter on the other side shall be governed by the law of the state of the adopters’ (the adopter’s) domicile.

Cases related with adoption shall belong to the jurisdiction of the courts of the Republic of Lithuania if the child (the adoptee) or the adopting persons (adopting person) are domiciled in the Republic of Lithuania.

Article 1.34. Law applicable to protective measures in relation to minors, their guardianship and curatorship

Law applicable to protection of minors, their guardianship and curatorship shall be determined pursuant to the Hague Convention of 5 October 1961 concerning the Powers of Authorities and the Law Applicable in Respect of the Protection of Minors.

Article 1.35. Law applicable to guardianship and curatorship of family members who have reached majority

Guardianship and curatorship of family members who have reached majority shall be governed by the law of the state of such incapable persons’ domicile.

Cases related with guardianship or curatorship of persons who have reached majority shall belong to the jurisdiction of the courts of the Republic of Lithuania if the incapable person’s domicile or his property is located in the Republic of Lithuania.

Article 1.36. Law applicable to maintenance obligations (alimony relationships) within the family

Maintenance obligations (alimony) within the family shall be governed by the Hague Convention of 2 October 1973 on the Law Applicable to Maintenance Obligations.

SECTION FIVE

LAW APPLICABLE TO CONTRACTUAL OBLIGATIONS

Article 1.37. Law applicable to contractual obligations

1 Contractual obligations shall be governed by the law agreed by the parties. Such agreement of the parties may be expressed in the form of separate terms of the concluded contract or it may be determined in accordance with the factual circumstances of the case. The law of the state designated by the agreement of the contracting parties may be applied to the whole contract or only to a part or parts thereof.

The initially chosen law applicable to contractual obligations may be changed by the agreement of the parties at any time. A change of law shall be retroactive to the time the contract was concluded though such change may not adversely effect the rights of third persons and shall not prejudice the formal validity of the contract.

The choice of the law applicable to a contract as made by the agreement of the parties may not be the grounds for refusing to apply the mandatory legal norms of the Republic of Lithuania or those of any other state that cannot be changed or declined by the agreement of the parties.

If no law applicable to a contractual obligation is designated by the agreement of the contracting parties, the law of the state with which the contractual obligation is most closely connected shall apply. The contractual obligation shall be presumed to be the most closely connected with the state in the territory of which:

1) the party bound to perform the obligation most characteristic to the contract is domiciled or has its central administration. If the obligation is most closely connected with the law of the state where the business of the party to the obligation is located, the law of that state shall apply;

2) immovable property is located, if the subject matter of the contract is the right in the immovable property or the right to its use;

3) was the place of the principal business of a carrier at the time when the contract for carriage was made, if the state of the principal business of the carrier is also the same state where the cargo was loaded, or the head office of the sender is located, or the place the cargo was dispatched from.

Paragraph 4 of this Article shall not apply where it is impossible to determine the place of performance of the obligation most characteristic to the contract and the presumptions established in this paragraph may not be relied upon as it is evident from the circumstances of the case that the contract is most closely connected with another state.

A contract of insurance shall be governed by the law of the state where the domicile or the place of business of the insurer is located; a contract of insurance in respect to an immovable thing shall be governed by the law of the state in the territory of which the thing is located.

An arbitration agreement shall be governed by the law applicable to the principal contract, and in the case of invalidity of the principal contract, by the law of the place where the arbitration agreement was concluded, where it is impossible to identify the place of conclusion, the law of the state in which arbitration is situated shall apply.

Contracts concluded in a stock exchange or auction shall be governed by the law of the state in which the stock exchange or auction is located.

Article 1.38. Law applicable to the form of transaction

The form of transaction shall be governed by the provisions established in paragraph 1 of Article 1.37 of this Code.

If no applicable law is designated by the agreement of the parties, the form of transaction shall be governed by the laws of the place where the parties entered into that transaction. A contract made by the parties residing in different states shall also be considered valid if its form corresponds to the legal requirements in respect of the form of the relevant transaction established in the national law of at least one of those states.

The form of transactions regarding an immovable thing or the rights therein shall be governed by the law of the state in which the immovable thing is located.

The form of consumer contracts concluded in cases provided for in paragraph 1 of Article 1.39 of this Code shall be governed by the law of the place of the consumer’s domicile.

Article 1.39. Particularities of application of foreign law to consumer contracts

A consumer contract for the purposes of this Article as well as other Articles of this Code shall be a contract on the acquisition of goods or services concluded between a natural person (consumer) and a person who sells such goods or services (supplier) for the purposes not related with the consumer’s commercial or professional activities, i.e. for the satisfaction of the consumer’s personal, family or household needs.

The right of the contracting parties established in paragraph 1 of Article 1.37 of this Code to make a choice of the law applicable to a contractual obligation shall not result in depriving or restricting the consumer of the right to protect his interests by the remedies determined by the provisions of the law of the state of his domicile if:

1) the formation of the contract in the state of his domicile was preceded by a special offer or by advertising in that country;

2) the consumer was induced by the other contracting party to travel to a foreign state for the purpose of forming the contract;

3) the order was received by the other party or his agent from the consumer in the state of the latter’s domicile.

If the parties to a consumer contract have not made a choice of the applicable law, the law of the state in which the consumer is domiciled shall apply.

The provisions of this Article shall not apply to contracts for carriage, contracts for the supply of services where the services are to be supplied to the consumer exclusively in a country other than the Republic of Lithuania.

Article 1.40. Laws applicable to the form, time-limit of validity and content of a power of attorney

The form of a power of attorney shall be governed by the law of the state in the territory of which it is issued. The time-limit of validity of a power of attorney, where it is not indicated in the document itself, the powers (rights and obligations) of the agent, the bilateral liability of the principal and the agent, and their liability in respect of third persons shall be governed by the law of the state in which the agent acts.

Article 1.41. Law applicable to gift

Gifts shall be governed by the law of the state of the donor’s domicile or his business activities with the exception of contracts upon gifting of an immovable thing, as such contracts shall be governed by the law of the state where that immovable thing is located.

A gift cannot be declared invalid as to its form if the form corresponds to the requirements of the law of the state in which the act of gift was performed, or of the law of the state of the donor’s domicile or his place of business activities.

Article 1.42 Law applicable to the assignment of a claim and the assumption of debt

Relations connected with the assignability of a claim and the assumption of a debt shall be governed by the law chosen by the parties upon agreement.

The choice of law made by the parties in the assignment of a claim may not be applied against the debtor without his consent to the application of the chosen law.

In the event of the parties not having made a choice of the applicable law, relations connected with the assignability of a claim and the assumption of a debt shall be regulated by the law governing the principal obligation, the claim arising from which (the debt) is to be assigned (assumed).

The form of the assignment of a claim or the assumption of a debt shall be governed by the law applicable to the contract of assignment or assumption.

SECTION SIX

LAW APPLICABLE TO DELICTUAL OBLIGATIONS

Article 1.43. Law applicable to delictual obligations

Rights and obligations of the parties resulting from tort shall be governed, at the choice of the aggrieved party, either by the law of the state where the tortious act was committed or any other tortious circumstances occurred, or by the law of the state in which the damage occurred.

Where it is impossible to determine the place where the act was committed or other circumstances occurred, or the state in which the damage appeared, the law of the state most closely connected with the case upon reparation for damage shall apply.

After the incurrence of damage, the parties may agree that the law applicable to the reparation for damage shall be the law of the state where the case concerned is being heard.

If both parties are domiciled in the same state, the law of that state shall be applicable to the reparation for damage.

An obligation to make reparation for damage caused by defective products shall be governed by the law of the state where the damage was incurred if the aggrieved person is domiciled in the same state, or it is the place of business of the person liable for the damage, or the products of inferior quality were acquired there by the aggrieved person. If the state of domicile of the aggrieved person coincides with the state of the place of business of the person liable for the damage caused, or with the state in which the defective product was acquired, the law of the state of the aggrieved person’s domicile shall apply. Where it is impossible to determine the applicable law in accordance with the criteria indicated in this paragraph, the law of the state where the business of the person liable for the damage is located shall apply, except in cases when the claim of the plaintiff is based on the law of the state in which the damage was made.

Terms of civil liability, its extent, the person liable and the terms of release from civil liability shall be governed by the law applicable to the obligations resulting from the delictual obligations.

Article 1.44. Law applicable to claims resulting from a traffic accident

Claims resulting from a traffic accident shall be governed by the Hague Convention of 4 May 1971 on the Law Applicable to Traffic Accidents.

Article 1.45. Law applicable to claims resulting from infringement of personal non-property rights

Claims for reparation of damage resulting from infringement of personal non-property rights committed by the mass media shall be governed, depending on the choice of the aggrieved person, by the law of the state where the aggrieved person is domiciled, or has his place of business, or where the infringement occurred, or by the law of the state where the person who caused the damage is domiciled or has his place of business.

Response to the media (denial) shall be governed by the law of the state in which the publication appeared, or the radio or television program was broadcast.

Article 1.46. Law applicable to claims for reparation of damage resulting from an act of unfair competition

Claims for reparation of damage resulting from an act of unfair competition shall be governed by the law of the state in whose market the negative effects of unfair competition occurred. If the act of unfair competition has affected exclusively the interests of an individual person, the applicable law shall be that of the state where the place of business of the aggrieved person is located.

Article 1.47. Plurality of debtors

If damage is caused by several persons, the applicable law shall be determined for each of them in accordance with the provisions of Article 1.43 of this Code.

SECTION SEVEN

LAW APPLICABLE TO REAL RIGHTS

Article 1.48. Law applicable to ownership legal relations

The ownership right and other real rights in an immovable and movable thing shall be governed by the law of the state where the thing was situated at the moment of change of its legal status. Acknowledgement of a thing to be movable or immovable shall be governed by the law of the state in which the relevant thing is located.

Official registration of the ownership right and other real rights shall be governed by the law of the state where the thing is located at the time of its registration.

The ownership right and other real rights in a thing in transit (cargo) shall be governed by the law of the state of destination of this thing.

The ownership right to an immovable thing resulting from acquisitive prescription shall be governed by the law of the state where the thing is located.

Article 1.49. The right of the parties to choose the law applicable to a movable thing

The parties may choose upon their agreement the law of the state of dispatch or the state of destination of the thing, or the law regulating the underlying legal transaction as the law applicable to the arisal and termination of the rights to the movable property.

The choice of the applicable law may not affect the rights of third persons.

Article 1.50. Law applicable to encumbrance of the right in a movable thing

1.Where a movable thing over which encumbrance of right was validly established abroad is imported into the Republic of Lithuania, that encumbrance shall be acknowledged to be likewise valid in the Republic of Lithuania.

Retention of title over a movable thing validly established abroad shall remain valid after that thing has been transported into the Republic of Lithuania, though such retention may not affect the rights of third persons in good faith.

Retention of title over a movable thing in transit shall be governed by the law of the state of its place of destination.

Article 1.51. Law applicable to pledge

The pledge of rights, securities and claims shall be governed by the law chosen by the parties, though the choice of law may not affect the rights of third persons.

In the absence of the parties’ choice of law, the pledge of claims and securities shall be governed by the law of the state where the place of domicile or business of the secured creditor is located; the pledge of other rights shall be governed by the law applicable to such rights.

SECTION EIGHT

In the absence of the parties’ choice of applicable law (Article 1.37 of this Code), contracts related to intellectual property rights shall be governed by the law of the state where the party transferring the intellectual property rights or granting the use thereof has his domicile or the place of business.

Contracts between an employer and an employee regarding the rights to intellectual property created by the employee in the course of his employment shall be governed by the law applicable to employment contracts.

Article 1.53. Intellectual property rights and the law applicable to their protection

Intellectual property rights and their protection shall be governed by the law of the state where the protection of the intellectual property rights is sought.

In the event of infringement of intellectual property rights, the parties may agree after the occurrence of the damage that the applicable law shall be the law of the state where the court hearing the case concerned is located.

SECTION NINE

LAW APPLICABLE TO OTHER OBLIGATIONS

Article 1.54. Law applicable to obligations arising from the reception of a thing not due, or unjust enrichment

Claims resulting from an obligation performed without any legal grounds for such performance shall be governed by the law of the state pursuant to the laws of which the legal sources for the obligation are determinable.

Claims related with unjust enrichment resulting from unlawful actions shall be governed by the law of the state where such unlawful actions were performed.

Where reception of a thing not due or unjust enrichment occurs from the existing legal relationship between the parties, the law determining that legal relationship shall apply.

Article 1.55. Law applicable to unilateral transactions

Unilateral transactions shall be governed by the law of the state where they were formed.

Article 1.56. Law applicable to securities

Cheques and bills of exchange shall be governed by the provisions set forth in the Geneva Convention of March 19, 1931 on Conflicts of Law in Matters of Bank Cheques and the Geneva Convention of June 7, 1930 on Conflicts of Law in Matters Involving Bills of Exchange and Promissory Notes.

Other securities shall be governed by the law of the state where they are issued (drawn).

Article 1.57. Law applicable to the currency in which payments are to be made

Currency in which payments are to be made shall be determined by the law of the state where the payment must be made, unless the parties have chosen upon their agreement the currency in which the payments are to be made.

In all other cases, currency shall be regulated by the law of the state which issued the currency.

Article 1.58. Law applicable to obligations deriving from other grounds

Obligations deriving from management of affairs of another, likewise obligations deriving from other grounds not specified in this Chapter shall be governed by the law of the state where the grounds for the obligation occurred.

Article 1.59. Law applicable to prescription

Prescription shall be governed by the law applicable in determining the rights and obligations of the participants in the relevant civil legal relationship.

SECTION TEN

LAW APPLICABLE TO LEGAL RELATIONS OF SUCCESSION

Article 1.60. Capacity to make a will

The capacity of making, amending or revoking a will shall be governed by the law of the state of the testator’s domicile. Where a person has no domicile or it is impossible to be determined, the capacity of such person to make a will shall be governed by the law of the state were the will is made.

Article 1.61. Form of a will

The form of a will, its amendment or revocation shall be governed by the law of the state where these acts are performed.

A will as well as its amendment or revocation shall also be valid in regard of the form if the form of the indicated acts is in compliance with the requirements of the law of the state of the testator’s domicile, or those of the laws of the state whose citizen the testator was at the time when the relevant acts were performed, or the law of the state of the testator’s residence at the time when those acts were performed or at the time of his death. A will in respect of an immovable thing, as well as any amendment or revocation thereof shall be valid if the form of the acts concerned is in compliance with the requirements of the law of the state where the immovable thing is located.

Article 1.62. Law applicable to other legal relations of succession

Other legal relationships of succession, with the exception of those related with inheritance of immovable things, shall be governed by the law of the state of domicile of the testator at the time of his death. Relations of succession in respect of an immovable thing shall be governed by the law of the state where the immovable thing is located.

Where succession opens by the death of a citizen of the Republic of Lithuania, irrespective of the law applicable, his heirs residing in the Republic of Lithuania and in possession of the right to the mandatory share of succession shall inherit this part in accordance with the law of the Republic of Lithuania, except the immovable things.

Where in accordance with the law applicable to relations of succession a property cannot devolve to a foreign state, and where no other heir thereto is known and the property is located in Lithuania, that property shall be devolved to the ownership of the Republic of Lithuania.

PART II

TRANSACTIONS

CHAPTER III

CONCEPT AND FORM OF TRANSACTIONS

Article 1.63. Concept and types of transactions

Transactions are the actions of persons intended to create, modify or extinguish civil rights and duties.

Transactions may be unilateral, bilateral or multilateral.

A transaction shall be considered to be unilateral where the expression of the will of one party is a necessary and sufficient condition for its formation.

A unilateral transaction shall impose obligations exclusively on the person who forms it. Obligations on any other persons shall be imposed by a unilateral transaction only in the cases established by laws or by an agreement between the persons concerned.

Legal norms which regulate obligations and contracts shall apply to unilateral transactions to the extent that this does not prejudice laws and the essence of the unilateral transaction.

A transaction shall be considered to be bilateral where the concerted will of two parties is a necessary condition for its formation.

A transaction shall be considered to be multilateral where the concerted will of three or more parties is a necessary condition for its formation.

Article 1.64. Form of the expression of will

The free will of a person who enters into a transaction may be expressed verbally, in writing, by action or in any other manner of expressing will.

The will of a person may be implied subject to the special circumstances under which the transaction is formed.

Silence may be deemed to be an expression of will exclusively in the cases established by laws or agreed upon by the parties to the transaction.

Article 1.65. Expression of will by means of public notice

In the cases established by laws or a contract, a person – the declarant – may express his will by means of a public notice (public authorization, public annulment of authorization, etc.) in accordance with the procedure established by this Article.

A public notice shall be published in a newspaper that is issued in the last known place of residence or business either of the other party to the transaction or that of the declarant of will, also in the major dailies of the Republic of Lithuania in accordance with the procedure established by the Code of Civil Procedure in respect of the service of public notice of court summons. The court may, if necessary, establish any other procedure for the expression of a person’s will by means of public notice.

A declaration of will by public notice shall be presumed to have become known to the other party upon the lapse of 14 days counting from the date of the last public declaration. However, this presumption shall not apply if the person who declared his will by public notice failed to perform every possible action available to him for the ascertainment of the place of residence or business of the other party to the transaction.

A public declaration of will shall be published at the expense of the declarant of the will.

Article 1.66. Conditional transaction

A transaction may render the appearance, modification or extinguishment of rights and duties dependent upon the fulfillment or non-fulfillment of certain conditions.

A transaction shall be deemed to be concluded with a suspensive condition if the arising of rights and duties therefrom is conditioned by the parties upon an uncertain event.

A transaction shall be deemed to be concluded with a resolutory condition if the extinguishment of rights and duties arising therefrom is conditioned by the parties upon an uncertain event.

A transaction shall be null and void if the arising, modification or extinguishment of rights and duties is conditioned by the parties upon the fulfillment of an unlawful condition or a condition incompatible with the public order or good morals, or upon the performance of unlawful actions.

Article 1.67. Consequences of an unfair hindering or assistance in the appearance of a condition

Where the appearance of a condition is unfairly hindered by a party to whom the condition is disadvantageous, this condition shall be considered as having existed.

Where the appearance of a condition is unfairly facilitated by a party to whom the condition is advantageous, this condition shall be considered as not having existed.

Article 1.68. Other consequences of a conditional transaction

If a condition had already been fulfilled at the time when the transaction was formed, such transaction shall be unconditional in the case of a suspensive condition, and null and void in the case of a resolutory condition.

If non-fulfillment of the conditions was already certain at the time when the transaction was formed, such transaction shall be unconditional in the case of a suspensive condition, and null and void in the case of a resolutory condition.

A transaction subject to a suspensive condition which is impossible objectively shall be null and void; a transaction subject to a resolutory condition which is objectively impossible shall be unconditional.

A transaction subject to a suspensive condition shall be null and void if the condition is dependent solely upon the will of the debtor.

Article 1.69. Place of transaction forming

A unilateral transaction shall be deemed to have been formed in the place where the will of a party to the transaction is expressed (the place where an authorization is given or a will (a testament) is made, etc.)

A bilateral or multilateral transaction shall be deemed to have been formed in the place of residence or business of the offeror, unless laws or agreement of the parties provide for otherwise.

Where the receipt of the notice of acceptance by the offeror is not a necessary condition for the formation of a transaction, such transaction shall be deemed to have been formed in the place of residence or business of the acceptor, or the place in which the factual actions of the acceptor were performed.

Article 1.70. Procedure of forming transactions

Natural persons may form transactions themselves or through their agents. It shall not be allowed to enter into transaction through an agent if, dependent on the nature of the transaction, it may be formed only by the natural person himself; the same stands for any other transactions determined by laws.

Transactions on behalf of legal persons shall be formed by the bodies or agents indicated in their founding documents.

Article 1.71. Form of transactions

Transactions shall be made in writing (in the ordinary or notarial form) or their formation may be implied from the actions.

A transaction, in respect of which there is no specific form established by laws, shall be deemed to have been formed if the person demonstrates by his behaviour the will to form a transaction (a contract formed by actions).

Article 1.72. Verbal form of transactions

Where the written form is not required by laws or by an agreement of the parties as a necessary condition for the forming of a transaction, the transaction may be formed verbally.

Transactions resulting from the performance of a written contract may be formed verbally if this does not contradict laws or the contract.

Article 1.73. Written form of transactions

1.The following shall be made in the ordinary written form:

transactions made by natural persons in the event where at the moment of their formation the value of the property upon which the transaction is made exceeds five thousand litas, except such transactions which are performed at the time of their formation;

transactions on the foundation of legal persons;

contracts of purchase and sale of goods by instalments;

insurance contracts;

arbitration agreements;

contracts of lease of a movable thing for a term of over one year;

preliminary contracts;

contracts of life annuity (contracts of rent);

compromise agreements;

other transactions whose mandatory ordinary written form is provided for by this Code or other laws.

Written transactions shall be made either by drawing up one document signed by all the parties or by the parties exchanging separate documents. Documents signed by the parties and transmitted by means of telegraph, facsimile communication or over any other means of communication terminal equipment shall be conferred the same power as having been made in the written form, providing the protection of the text is guaranteed and the signature can be identified.

The parties may agree to adopt additional requirements for the written form of the transaction (signatures of certain persons, affixation of a stamp on the document, assignment of a special form for the document, etc.) and establish the legal effects for non-compliance with such requirements. In the event of the parties failing to comply with the established requirements, the transaction shall not be considered formed, unless the parties agree otherwise.

Article 1.74. Notarised transactions

1.The following transactions shall be drawn up in the notarial form:

1) transactions on the transfer of the real rights in an immovable thing and transactions on the encumbrance of the real rights and of the immovable thing;

2) contracts of marriage (pre-nuptial and post-nuptial);

3) other transactions which are to be notarised in accordance with the mandatory provisions of this Code.

Article 1.75. Legal registration of transactions

The law may establish mandatory legal registration of certain transactions. A transaction shall produce its effects between the parties even if it is not registered in the mandatory order. In such instances, the rights and duties of the parties produce their effects between them not from the moment of registration of the transaction but from the moment established by the law or agreement of the parties, except in cases where it is expressly determined by this Code that the rights and duties of the parties shall arise only from the moment of registration of the transaction concerned.

The parties to an unregistered transaction may not invoke the fact of transaction against third persons and argue their rights against third persons by relying on other means of proof.

If the same real rights or the same thing is acquired by several acquirers but only one of them registers that transaction, it shall be considered that the acquirer who has registered the transaction is vested with that thing or with the real rights in that thing. If none of the acquirers registers the transaction, it shall be considered that the acquirer who is the first to form that transaction is vested with the rights indicated above.

If several persons register their property rights or real rights in the same thing, the person who is the first to register that transaction shall be vested with these rights.

Damage caused to persons by unlawful acts of the officials of state institutions or other organisations effectuating mandatory legal registration of transactions shall be compensated by the state.

Article 1.76. Signing of transactions formed in writing

Transactions drawn up in writing must be signed by the contracting parties. Where a natural person, due to physical defect, illness or any other reason, cannot sign it himself, he may authorize another person to sign on his behalf. The signature of the latter must be witnessed by a notary; or the head or a deputy head of the enterprise, institution or organisation where the person concerned is employed or studies; or by the head physician or a deputy head physician of the in-patient medical institution where the person concerned undergoes treatment; or by the commander of the military unit or a deputy commander thereof if the transaction is made by a soldier; or by the master of a ship during the period of a long voyage; in addition, the reason for which the person entering into the transaction is unable to sign it himself must be indicated.

Where the transaction is made by employing telecommunication terminal equipment, in all cases there must be sufficient data for the ascertainment of the parties to the transaction. In the event of absence of such data, the parties, if a dispute arises, may not rely upon witnesses to prove the fact of transaction forming.

Article 1.77. Formation of transactions in the form other than established by the law

Transactions which are permitted by laws to be formed verbally, may also be made in the written or notarial form.

Transactions, the ordinary written form for which is mandatory, may also be formed in the notarial form.

CHAPTER IV

VOIDABILITY OF TRANSACTIONS

Article 1.78. Null and voidable transactions

If the nature of nullity is clearly indicated in the law, a transaction shall be presumed to be null, irrespective of the fact of existence of a court judgement upon its nullity. The parties may not ratify a transaction which is null and void.

Any transaction for the declaration of voidability of which a court judgement is necessary, shall be a voidable one.

A transaction may be deemed to be null and void only on the grounds established by laws.

An action for the voidability of a voidable transaction may be invoked only by the persons indicated in the laws.

A claim to apply the legal effects arising from a transaction that is null and void may be invoked by any interested person. Legal effects of a null and void transaction, also the fact of its nullity shall be stated by the court ex officio (on its own motion).

Article 1.79. Ratification of a voidable transaction

A party possessing the right to invoke voidability of a transaction may ratify it within the time-limit established by the other party or the laws. After ratifying the transaction, the party forfeits his right to claim for voidability of that transaction.

It shall be presumed that a transaction is ratified by the party if, after it became possible to be ratified or disputed by that party, any of the following events have taken place:

1) the transaction has been performed partly or in whole;

2) a demand has been made against the other party for the performance of the transaction;

3) a security for the performance of the obligation subject to ratification has been granted to the other party;

4) the rights acquired according to that transaction have been transferred to another person partly or in whole.

Article 1.80. Nullity of a transaction that does not correspond to the requirements of mandatory statutory provisions

Any transaction that fails to meet the requirements of mandatory statutory provisions shall be null and void.

When a transaction is null and void, each party shall be bound to restore to the other party everything he has received according to that transaction (restitution), and where it is impossible to restore in kind the received, the parties are bound to compensate the received to each other in money, unless the laws provide for other consequences of voidness of the transaction.

The rules of restitution are established by Book Six of this Code.

The property – object of the transaction that is annulled – may not be claimed from the third person in good faith, except in cases provided for in paragraphs 1, 2 and 3 of Article 4.96 of this Code.

Article 1.81. Nullity of a transaction contradicting public order and good morals

A transaction that is contrary to public order or norms of good morals shall be null and void.

If a transaction is annulled on the grounds established in paragraph 1 of this Article, the rules provided for in paragraph 2 of Article 1.80 of this Code shall not apply if both parties knew or should have known the transaction to be contrary to public order or good morals.

Unilateral or bilateral restitution may take place where its application is not contrary to the mandatory statutory provisions or good morals, i.e. where the purpose of the transaction contradicting public order or norms of good morals was not achieved, and the provisions of public law do not establish any property sanctions in regard to the parties to such transaction.

Article 1.82.Voidability of a transaction contradicting the legal passive capacity of a legal person by whom the transaction was formed

1.Transactions made by the governing bodies of a private legal person in breach of the competence conferred on them by their founding documents or contradicting the goals of that legal person may be declared void only in the cases where it is proved that the other party acted in bad faith, i.e. he knew or should have known that the transaction was contrary to the goals of the legal person concerned. In such cases, the fact of announcement of the founding documents of the legal person concerned shall not be a sufficient proof of the other party’s bad faith, therefore the legal person shall be bound to prove that the other party deliberately acted in bad faith (Article 2.74 and Articles from 2.83 to 2.85 of this Code).

Transactions formed by public legal persons that are contrary to the goals of their activities may be declared void.

An action for the declaration of voidness on the grounds established by this Article may be brought by the legal person, the founder (founders) or a participant (participants) thereof. The laws may also specify other persons entitled to bring such an action, or special requirements which have to be met by the persons bringing such an action (e.g., holding of a certain number of shares (deciding votes))

Transactions indicated above shall be governed by the rules prescribed in paragraph 2 of Article 1.80 of this Code.

Article 1.83. Legal effects of a transaction formed on behalf of a legal person that is not registered within the procedure established by laws or has no licence to be engaged in the activities that are prohibited without a licence

Where a transaction is made on behalf of a legal person that is not registered within the procedure established by laws, the natural person by whom such a transaction is made acquires the rights and assumes the duties arising from that transaction, providing there are no other grounds for declaring such transaction void.

Where transactions are made on behalf of a legal person prior to its registration, the persons by whom these transactions are made shall be solidary liable, unless the legal person, after it is registered, assumes the obligations resulting from those transactions (Article 2.61 of this Code).

Article 1.84. Voidability of a transaction formed by a natural incapable person

A transaction shall be voidable if formed by a minor under fourteen years of age, except in cases where the minor, within the limits imposed by his age and in accordance with this Code and other laws of the Republic of Lithuania, may enter into transactions alone to satisfy his ordinary and usual needs.

A transaction is likewise voidable if it is made by a natural person who within the procedure established by laws is recognised as legally incapable by reason of mental disease or imbecility.

In the cases established in paragraphs 1 and 2 of this Article, besides the consequences provided for in paragraph 2 of Article 1.80 of this Code, the legally capable party shall be obliged to compensate the expenses suffered by the other party, also any damage to the latter’s property or loss thereof if the capable party knew or should have known about the incapacity of that other party.

The voidness of such transaction may be invoked by statutory representatives of the incapable person, also a public prosecutor. A transaction, if it is beneficial to the incapable person, may be ratified by the statutory representative of the latter in accordance with the procedure established by laws.

Article 1.85. Voidability of a transaction made by a natural person who overindulges in strong drinks or narcotic substances

A transaction upon the transfer of property or a real right that is formed by a natural person whose legal active capacity is limited by reason of overindulgence in strong drinks or narcotic substances and without the consent of a curator, except small transactions to meet his ordinary and usual needs, can be declared voidable within the judicial procedure on the action of the curator or a prosecutor.

If a transaction indicated in the preceding paragraph of this Article is declared voidable, the provisions of paragraph 3 of Article 1.84 of this Code shall apply.

After a transaction has been formed, a curator may ratify the transaction formed by the protected person alone during the period of his limited capacity for which he required to be represented if such transaction is beneficial to the person with limited capacity.

Article 1.86. Nullity of a fictitious transaction

A transaction made for the sake of appearance without intention to create legal effects shall not produce its effects between the parties and shall be null and void.

The provisions established in paragraph 2 of Article 1.80 of this Code shall apply to the transactions specified above.

Article 1.87. Nullity of a simulated transaction

If a transaction is formed to cover up another transaction, i.e. if the parties’ intent to make a transaction is different from the simulated transaction, the rules applicable to the intended transaction shall apply.

If the rights or lawful interests of third persons are violated by a simulated transaction, the third persons in defence of their rights shall be able to plead simulation against the parties of the simulated transaction.

A simulated transaction cannot be used as a defence by the contracting parties against third persons who in good faith have acquired rights from the simulated transaction.

Article 1.88. Declaring voidable a transaction made by a minor from fourteen to eighteen years of age

A transaction made by a minor from fourteen to eighteen years of age, where the law does not allow him to act without the consent of his parents or curators, may be declared void within the judicial procedure on the action of such minor’s parents or curators, with the exception of transactions into which the minor may, within the limits imposed by his age, enter alone in accordance with this Code and other laws of the Republic of Lithuania.

If a transaction specified in paragraph 1 of this Article is declared void, the rules prescribed in paragraph 3 of Article 1.84 of this Code shall apply.

Statutory representatives of a minor can ratify a voidable transaction made without a proper consent, by giving their consent after the transaction has been formed, if such transaction is beneficial to the minor concerned.

Article 1.89. Declaring voidable a transaction formed by a natural person who was unable to understand the meaning of his own actions

A transaction formed by a capable natural person may be annulled within the judicial procedure on the action of the natural person concerned if, by reason of his state at the moment of the transaction forming, he was unable to comprehend the meaning of his acts or to control them.

Where the transaction specified in paragraph 1 of this Article is declared void, besides the consequences established in paragraph 2 of Article 1.80 of this Code, the following additional consequences arise: the other party shall be bound to compensate to the party who at the moment of the transaction forming was unable to comprehend his own actions or to control them the expenses suffered, also any damage to his property or loss thereof, if this another party was aware or should have been aware of the state of the first contracting party.

Article 1.90. Declaring voidable a transaction formed under the influence of a mistake

A transaction resulting from the consent given by an essential mistake may be declared void within the judicial procedure on the person’s whose consent is vitiated action for its voidness.

A mistake is an erroneous assumption of the essential facts of the transaction that existed at the moment of the transaction forming.

In the event of annulment of a transaction formed under the influence of an essential mistake, the provisions established in paragraph 2 of Article 1.80 of this Code shall apply. The party upon whose action the transaction is declared void may, in addition to the annulment, also claim from the other party compensation for the expenses incurred or the damage to his property or loss thereof if this party proves that the mistake was caused by the fault of the other party. Where it is not proved, the party on whose action the transaction is declared void shall be bound to compensate to the other party the expenses incurred as well as the damage to his property or loss thereof.

A mistake is essential where the error relates to the nature, object or any other essential conditions of the contract itself, or the civil legal status of the other contracting party or any other circumstances, and where a person of normal diligence and attentiveness would not have made the transaction in a similar situation or would have made it on essentially different terms if he had known the real state of events. A mistake is likewise essential if both contracting parties are mistaken, or an error of one party induced the other party to err without the former’s intention to deceive, or if one party was aware or should have been aware of the mistake committed by the other party and the requirement addressed to the mistaken party to perform the transaction would contradict to the principles of good faith, justice and reasonableness.

A mistake may not be considered essential if caused by gross negligence of the mistaken party, or induced by circumstances the risk of which was taken by the party upon himself or if, taking into account the concrete circumstances, the risk of mistake falls on that party in particular.

A mistake resulting from the expression or transmission of a party’s will shall be deemed to be a mistake committed by that party himself.

The mistaken party cannot claim for the annulment of a contract where his rights and interests may be adequately protected by invoking other remedies.

Article 1.91. Voidability of a transaction made by a party whose consent was obtained by fraud, extorted by duress, economic pressure or induced by real threatening, likewise of a transaction made by the malicious agreement of a agent of one party with the other party, or a transaction entered into because of abusive circumstances

A transaction may be declared voidable by a court on the action of the aggrieved party if it was entered into due to fraud, duress, economic pressure or real threatening, or if it was formed by a malicious agreement of the agent of one party with the other party, likewise if, by entering into the transaction by reason of abusive circumstances, one party assumes obligations under unfair conditions.

Where the voidability of a transaction is based on any of the grounds specified in paragraph 1 of this Article, the other party shall be bound to restore to the aggrieved party everything he has received according to that transaction, and where it is impossible to restore (in kind), it must be compensated in money. In addition, the guilty party shall be bound to compensate to the aggrieved person all the expenses incurred.

Where a transaction is declared voidable by reason of fraud, violence, economic pressure, real threatening or malicious agreement made between the agent of one party and the other party, the aggrieved party may, in addition to remedies provided for in the preceding paragraph of this Article, claim non-pecuniary damage caused by the actions indicated.

For the purposes of this Article, the notion “real threatening” means unjustifiable or unlawful actions of the other party or a third person directed towards the person, property or reputation of the other contracting party, or that of his parents, children, spouse, grandparents, grandchildren or any other close relatives; the threatening actions must be of such nature as to impress a reasonable person and to cause him fear that the person, property or reputation of the persons concerned may be exposed to damage and there is no other reasonable alternative except to enter into the transaction. Threatening shall also be deemed to be real where one party or a third person threatens to enforce measures of economic pressure against the other contracting party that is economically weaker or is in essence economically dependent in order to compel him to form a transaction under exceptionally economically disadvantageous conditions. In determining the occurrence of real threatening, the court shall take into account the age, economic and financial position, and the gender of the party towards whom the threat was directed, the nature of the threat, and any other conditions significant for the case.

In addition to the forms specified in the preceding paragraph of this Article, fraud may result from the silence of a party, i.e. from concealment of such circumstances being aware of which the other contracting party would not have formed the transaction and which, within the principles of reasonableness, justice and good faith, had to be disclosed to the other party; fraud may also result from active actions by which it is desired to mislead the other contracting party concerning the effect of the transaction, essential terms thereof, civil legal capacity of the person who enters into the transaction, and any other essential circumstances.

If a third person, but not the other party to the transaction is guilty of fraud, duress or threatening, the transaction shall be declared voidable only in the cases where that other party was aware or should have been aware of those facts.

The fact of declaring voidable a transaction formed under the influence of fraud may not be invoked against third persons in good faith, except in cases established by this Code.

Article 1.92. Voidability of a transaction formed by an agent outside the authority conferred on him

A transaction made by a agent outside the limitations of the authority conferred on him by laws or a contract, may be declared voidable upon the action of the principal, unless such transaction is ratified by the principal (Article 2.133 of this Code).

Article 1.93. Voidability of a transaction resulting from the lack of requisites of its form established by laws

A transaction not made in the form required by laws for this particular case shall be void only in the case when such consequence is expressly indicated in the laws.

Where any dispute arises upon the fact of forming or performance of a transaction which fails to meet the necessary requirements for its ordinary written form, the parties lose the right to use testimony of witnesses as evidence to prove the facts indicated above; in the cases expressly prescribed by the law, non-observance of the ordinary written form obligatory to a concrete kind of transactions shall cause the nullity of such transaction.

Non-observance of the notarial form required by the law as a necessary condition of a transaction shall result in the nullity of the transaction in any case.

Where one party in the whole or partly performs his obligations arising from a transaction that must be notarized while the other party avoids the notarization thereof, the court may, on the action of the party who has performed his obligations, declare such transaction valid. In such event, a subsequent notarization of the transaction is not required.

Where nullity of a transaction results from the lack of necessary requisites of its form as established by laws, the consequences provided for in paragraph 2 of Article 1.80 of this Code shall arise.

The provisions established in paragraph 2 of this Article may not be applied by a court if they contradict the principles of good faith, justice and reasonableness, in particular where:

1) there exists other written evidence, even though indirect, that proves the forming of the transaction;

2) written evidence to prove the fact of transaction forming has been lost not through the fault of the party;

3) taking into consideration the circumstances in which the transaction was formed, it was objectively impossible to form that transaction in writing;

4) taking into consideration the interrelations between the parties, the nature of the transaction, and other circumstances of importance to the proceedings, prohibition to invoke testimonies of witnesses would contradict to the principles of good faith, justice and reasonableness.

Article 1.94. Legal effects of non-observance of the requirement to perform legal registration of a transaction

Non-observance of the requirement established by laws to perform legal registration of a transaction shall not result in nullity of the unregistered transaction, except in the cases prescribed by this Code.

Article 1.95. Time from which the effect of annulment arises

A transaction which has been annulled shall be deemed to be null and void ab initio (from the moment of its forming).

Where from the content of a transaction follows that it is impossible to declare such transaction void ab initio, it may be declared void only for the future, i.e. from the time when the judgement acquires the authority of the final judgement (res judicata).

Article 1.96. Consequences of partial nullity of a transaction

Partial nullity of a transaction shall not import the nullity of the entire transaction where it can be supposed that the contracting parties would have entered into that transaction even without the part affected by nullity having been included.

PART III

OBJECTS OF CIVIL RIGHTS

CHAPTER V

CONCEPT AND KINDS OF OBJECTS OF CIVIL RIGHTS

Article 1.97. Kinds of objects of civil rights

Objects of civil rights shall be things, money and securities, other property and property rights, results of intellectual activities, information, actions and results thereof, as well as any other material and non-material values.

Things and property the turnover of which is restricted may be considered to be objects of civil rights only in the cases established by laws. Things which are withdrawn from civil use or the turnover of which is restricted must be imperatively indicated in the laws. Otherwise, the civil turnover of things or property shall not be considered restricted.

Article 1.98. Things as object of civil rights

Things as object of civil rights shall be divided into movables and immovables.

Land and other things which are connected with land and which cannot be moved from one place to another without change of their purpose and essential reduction of their value are immovables (buildings, equipment, perennial plants and other things which, according to their purpose and nature, are deemed to be immovable).

Ships and aircraft, the mandatory legal registration for which is established by laws, are also considered to be immovables. Any other property may also be attributed to immovables by the laws.

Things which can be moved from one place to another without a change of their purpose and considerable reduction of their value are considered to be movables, unless otherwise provided for by laws.

Article 1.99. Kinds of things as objects of civil rights

Things as objects of civil rights shall be divided into things determined by their individual features and things determined by their specific properties.

Things also are divided into divisible and undivisible, consumptable and unconsumptable, principals and accessories.

Article 1.100. Money

Money, as an object of civil rights, shall be bank-notes issued by the Bank of the Republic of Lithuania, coins and means in accounts, also bank-notes issued by other foreign states, Treasury notes, as well as coins and means in accounts, serving as lawful means of settlement.

Article 1.101. Securities

A security, as an object of civil rights, is a document certifying the obligation of its issuer to the holder of this document. A security can confirm the right of the person in possession of the document (holder) to receive from the issuer interest, dividends, part of an enterprise upon its liquidation, or the funds lent to the issuer (shares, bonds, etc.); the right or duty to acquire or alienate for payment or gratuitously other securities (the right to sign, future transactions, options, convertible bonds, etc.); the right to some income or payment duty subsequent to a change of prices on the security market (index, etc.). A security is also a document by which a direct order is issued to a bank to pay a certain sum of money (cheques) or which certifies a duty to pay a certain sum of money to the person whose name is indicated in the document (bill of exchange); or which proves the right of ownership to merchandise (mercantile securities): likewise a document which certifies the right or duty to acquire or alienate mercantile securities (derivative mercantile securities). Uncertified securities are issued in the cases established by laws and indicated (consolidated) in a special security register.

The laws may also provide for other types of securities. For the purposes of protecting the rights of investors, as well as for supervising and regulating the capital market, the laws may provide for a different definition of securities (investment) to be employed in the laws which regulate these relationships. Unless provided for otherwise, the provisions of this Code and the definition of securities shall apply to investment (investment securities) if the documents certifying the investment possess the features specified in paragraphs 1 and 3 of this Article.

The right certified by a security may be alienated to another person only in that event if the security itself is alienated, unless otherwise provided for by the laws. Securities may be alienated in accordance with the laws, the ordinary practice or by custom freely and unrestrictedly. Securities shall be alienated by transfer, though it ought to be certified by means of making an inscription of transfer of the security – an endorsement.

Securities may be underlying or derivative. Underlying securities confirm their holders’ rights and duties specified in paragraph 1 of this Article, with the exception of the right or duty to acquire or alienate for payment or gratuitously other securities, as well as the right to receive certain income or an duty to pay a certain sum of money subsequent to a change of prices on the security market. The securities which certify these exclusive rights or duties are called derivative securities.

Securities are divided into registered, bearer or order securities. They also divided into monetary, investment and mercantile securities.

A monetary security grants the right to receive a certain sum of money indicated therein (cheque, bill of exchange, bond).

An investment security concedes the right to participate in the management of the enterprise, certifies possession of the enterprise capital and entitles to receive a part of its profits (shares and certificates of shares, etc.), except in cases provided for by laws.

A mercantile security grants the right of ownership of merchandise, also the right to receive merchandise (bill of lading, way-bill, etc.).

Securities must contain the requisites provided for by laws. The absence of obligatory requisites of a security shall render it null, except in cases established by laws.

Upon the issue of uncertified securities, where the laws do not provide for otherwise, it shall be presumed pursuant to this Code that the holder of the securities has entrusted the accountant with their keep upon the contract of deposit. The rights, obligations and liability of the keeper shall be determined in accordance with the provisions of Book Six of this Code applicable to the contract of deposit. Where accountancy is managed by several persons on different levels, it shall be presumed that the person who handles the accounts of the security owner has transferred the keep of the securities concerned to another person under the contract of deposit. Such securities shall be alienated by the relevant entries in the security register.

Article 1.102. A share

A share is a security certifying the right of its holder (shareholder) to participate in the management of a stock company and, where the laws do not provide for otherwise, to receive a part of the stock company profits in the form of dividend and a part of the remaining property of the stock company in case of its liquidation, as well as certifying other rights established by laws.

Shares may be of the following classes: registered or bearer, ordinary or preference, certificates or uncertificated.

Article 1.103. A bond

A bond is a security certifying its holder’s right to receive from the person who issues the bond the nominal value of the bond, annual interest or any other equivalent, or other property rights within the time-limits prescribed in it.

Article 1.104. A cheque

A cheque, as a security, is an unconditional order drawn up in a certain manner that is addressed by the drawer to a bank to pay a certain sum in money to the holder of the cheque.

Article 1.105. A bill of exchange

A bill of exchange, as a security, is an unconditional order in writing addressed by one drawer to another by which the first person pledges himself or entrusts another person to pay directly or indirectly a certain sum of money to the person whose name is indorsed therein.

A bill of exchange may be of two forms: an order bill (draft bill) or a single bill (sole bill).

By using an order bill (draft bill) its drawer entrusts another person to pay to the person whose name is indorsed in the bill the sum indicated therein.

By using a single bill (sole bill) its drawer pledges himself to pay the sum indicated therein.

Article 1.106. A bill of lading

A bill of lading, as a security, is a document certifying the fact of conclusion of a contract and its holder’s right to receive from the carrier the goods specified therein (cargo) and the right to dispose of the goods (cargo) received.

A bill of lading may be bearer, order or straight. If a bill of lading is drawn up in several copies, after the shipment is delivered under any of the copies of the bill of lading presented first, the other copies thereof shall lose their legal power.

Article 1.107. A bank certificate

A bank certificate is a written bank document containing a statement on the monetary contribution and granting the depositor the right to receive that contribution and interests subject to the time-limits stated therein.

A bank certificate may be inscribed, transferable or non-transferable.

Article 1.108. A state debt obligation

A state debt obligation is a security payable to the bearer which certifies that its holder has lent a certain sum in money to the state and grants its holder the right to receive the sum indicated therein and interests established thereby during the period of the possession of this security.

Article 1.109. A plot of land and other resources

A land plot indicated in kind and registered within the procedure established by laws, also the indicated areas of the entrails of the earth, as well as waters, forests, objects of flora and fauna may be objects of civil rights.

Article 1.110. Enterprises and other property complexes

An enterprise, as a complex of assets, property and non-property rights belonging to the person who is engaged in business (seeking profit), as well as debts and other duties thereof, may be the object of civil rights. An enterprise is considered to be an immovable thing.

A property complex, as the object of civil rights, is the totality of things joined by a common economic purpose.

Article 1.111. Results of intellectual activities

Works of science, literature and art, invention patents, industrial samples and other results of intellectual activities expressed in any objective form (manuscripts, technical drawings, models, etc.) shall be deemed to be objects of civil rights. Invention patents and other results of intellectual activity shall become objects of civil rights from the moment of their recognition as such made within the procedure established by laws.

Article 1.112. Property rights

Real rights, rights arising from obligations, also rights arising from the results of intellectual activities shall be objects of civil rights.

Property rights may be transferred and inherited.

Article 1.113. Actions and their results

Various actions and their results (transportation of goods, repairing of things, services, etc.) shall be objects of civil rights.

Article 1.114. Personal non-property rights and values

Personal non-property rights and values, i.e. name, life, health, inviolability of body, honour, dignity, the private life of an individual, the author’s name, professional reputation, business name, trade marks of goods (services) and other values with which the arising of certain legal effects is linked by the laws shall be objects protected by the Civil law.

Personal non-property rights may be transferred or inherited only in the cases established by laws or where this does not contradict the nature of these values and principles of good morals or is not restricted by laws.

Article 1.115. Personal non-property rights

Objects protected by the Civil law are personal non-property rights, i.e. the rights that have no economic content and are inseparably related with their holder.

Personal non-property rights may be related with property rights, or they may not be related with the aforesaid rights.

Article 1.116. Commercial (industrial) and professional secret

Information shall be considered to be a commercial (industrial) secret if a real or potential commercial value thereof manifests itself in what is not known to third persons and cannot be freely accessible because of the reasonable efforts of the owner of such information, or of any other person entrusted with that information by the owner, to preserve its confidentiality. The information that cannot be considered commercial (industrial) secret shall be determined by laws.

Forms of protecting the information containing a commercial (industrial) secret are established by this Code.

Persons who unlawfully acquire information considered to be a commercial (industrial) secret shall be bound to compensate for the damages caused. Workers who in breach of the labour contract disclose a commercial (industrial) secret, as well as a party of any other contract who in breach of that contract discloses a commercial secret shall also be bound to compensate damages resulting from the disclosure of the commercial (industrial) secret. In this event, the damages suffered by the holder of the secret include the investment expenses incurred for its creation, development and use, as well as the incomes of which he (the holder) has been deprived. Incomes received from unlawful use of a commercial (industrial) secret shall be considered unjust enrichment.

A person who discloses a commercial (industrial) secret may be released from liability if he proves that the disclosure of that secret is justified by the interests of public safety.

Information shall be considered to be a professional secret if, according to the laws or upon an agreement, it must be safeguarded by persons of certain professions (advocators, doctors, auditors, etc.). This information is received by the indicated persons in performance of their duties provided for by laws or contracts. The cases when the information received in exercise of professional rights and in performance of professional duties shall not be considered professional secret are established by laws. Damage resulting from unlawful disclosure of a professional secret shall be compensated upon general grounds established by this Code.

PART IV

TIME-LIMITS

CHAPTER VI

GENERAL PROVISIONS

Article 1.117. Definition of a time-limit

A time-limit is a period of time determined by laws or a transaction or established by a judicial authority and fixed by a calendar date or by the termination of a period expressed in years, months, weeks, days or hours.

A time-limit may also be defined by indicating an event that must inevitably occur.

Time-limits may be restoratory, acquisitionary or resolutory.

A restoratory time-limit is a period which may be restored by the court after its expiration, providing it was exceeded due to substantial reasons.

An acquisitionary time-limit is a period after the expiration of which a certain civil right or duty is acquired.

A resolutory time-limit is a period after the expiration of which a certain civil right or duty expires. The resolutory time-limits may not be restored by a court or arbitration.

Article 1.118. Commencement of a time-limit

The moment from which a time-limit begins shall be 0 hours 00 minutes of the next day that follows the calendar date or the event by which its beginning is defined, unless law provide for otherwise.

A fixed time-limit that is expressed in hours shall begin from the moment defined by laws or one or both parties.

Article 1.119. Expiration of a time-limit expressed in years and months

A time-limit expressed in years shall expire at midnight on the corresponding day and month of the last year of the time-limit indicated as the dies ad quem (the day on which the time-limit expires).

A time-limit expressed in months shall expire at midnight on the corresponding day of the last month of the time-limit indicated as the dies ad quem.

In the event where in the time-limit expressed in years or months there is no corresponding day in the last month, the day of maturity shall be the last day of the relevant month.

Article 1.120. Expiration of a time-limit expressed in weeks

A time-limit expressed in weeks shall expire at midnight on the corresponding day of the week indicated as the dies ad quem.

Article 1.121. Inclusion of official holidays and weekends

Official holidays and weekends shall be included when calculating a time limit.

In the event where the day on which a time-limit expires is a day of an official holiday or a weekend, the time-limit shall be extended to include the first working day thereafter.

Article 1.122. Performance of actions on the dies ad quem

An action for the performance of which a time-limit is fixed shall have to be performed before midnight of the dies ad quem. Where an act has to be performed in an institution, it must be performed before the end of the normal office or business hours of that organisation on the dies ad quem.

Any applications and information in writing delivered to the post office or telegraph, or transmitted by other means of communication before midnight of the dies ad quem shall be considered to have been performed on time.

Article 1.123. Legal significance of a time-limit

If arising of a duty is made dependent upon the expiration of a certain time-limit, the performance of the duty may not be demanded before the expiry of that time-limit.

If certain legal effects of a transaction are made dependent upon the maturity of a time-limit, a transaction or obligation shall terminate with the expiry of the time-limit.

It shall be presumed that a time-limit takes effect in favour of a debtor except in the cases where:

1) the debtor is put on bankruptcy proceedings;

2) the debtor destroys the security provided for the performance of an obligation;

3) the debtor fails to provide a security of performance of an obligation he was bound to provide.

CHAPTER VII

PRESCRIPTION

Article 1.124. Concept of prescription

Prescription is a time period established by laws during which a person can defend his violated right by bringing an action.

Article 1.125. Time limits of prescription

General prescription comprises a period of ten years.

In respect of concrete kinds of claims, abridged prescription shall be established by this Code and other laws of the Republic of Lithuania.

Abridged one-month prescription shall apply to claims arising from the results of tender.

Abridged three-month prescription shall apply in respect of claims for declaring voidable the decisions of the bodies of a legal person.

Abridged six-month prescription shall apply in respect of:

1) claims arising from the exaction of penalties;

2) claims arising from shortage in the goods sold.

Abridged six-month prescription shall apply with respect to claims arising from the relationships between communication enterprises and their clients regarding dispatches sent within the territory of Lithuania, or abridged one-month prescription when the dispatches were sent abroad.

Abridged one-year prescription shall be applied with respect to claims arising from the legal relationships of insurance.

Abridged three-year prescription shall be applied with respect to claims for the compensation of damage, including claims for the compensation of damage caused by defective production.

Abridged five-year prescription shall be applied with respect to claims for the recovery of interest and any other periodical payments.

Claims arising from defects of the work performed shall be prescribed in the abridged prescription established in Book Six of this Code.

Claims, arising from contracts for transportation of goods, passengers or baggage shall be prescribed in the abridged prescription established by the codes (laws) regulating separate types of transport.

Any agreement of the parties with an intention to modify legal regulation of prescription, i.e. to modify the time-limit and the calculation thereof, shall be prohibited.

Article 1.126. Application of prescription

A claim to protect a violated right shall be accepted by the court irrespective of the expiry of prescription.

The expiration of prescription shall be effected by the court exclusively if invoked by a party to the dispute.

Prescription may not be renounced in advance.

Article 1.127. Commencement of prescription

Prescription shall start its run from the day on which the right to bring an action may be enforced. The right to bring an action arises from the day on which a person becomes aware or should have become aware of the violation of his right. Exceptions to this rule shall be established by this Code and other laws of the Republic of Lithuania.

Where there is a time-limit established for the performance of an obligation, prescription of a claim arising from such obligation shall start its run upon the expiry of the time-limit allotted for the performance of that obligation.

Where a time-limit for the performance of an obligation is not established, prescription shall run from the moment when a claim to perform the obligation is brought.

Prescription of claims arising from regressive obligation shall start its run from the moment when the principal obligation is performed.

In the event of a continuous infringement, i.e. it happens every day (a person fails to perform the actions he is bound to perform, or performs the actions he has no right to perform, or does not discontinue another violation), prescription for actions brought upon activity or inactivity that occurred on a concrete day shall start its run from that every day.

Article 1.128. Prescription of claims arising from an obligation upon subrogation

Substitution of persons in an obligation shall not affect the course of prescription – the time-limit and the procedure of its calculation, unless laws provide for otherwise.

Article 1.129. Suspension of prescription

Prescription shall be suspended if:

1) an extraordinary event that cannot be prevented in certain circumstances (force majeure) hinders to bring an action;

2) the Government of the Republic of Lithuania establishes a postponement of the performance of obligations (moratorium);

3) the plaintiff or defendant serves in a unit of the armed forces of the Republic of Lithuania where martial law is imposed;

4) no guardian or curator is appointed to a legally incapable person or to a person whose legal active capacity is limited;

5) the parties to an obligation are spouses;

6) the parties to an obligation are a guardian and the person under guardianship, or a curator and the person under curatorship;

7) the parties to an obligation are parents and their minor children;

8) the effect of the law or any other legal act regulating relationships of the dispute is suspended;

The run of prescription shall be suspended only in the event when the circumstances indicated in paragraph 1 of this Article occured or continued to exist during the last six months of the prescription; where the time-limit of the prescription does not exceed six months, the run of the prescription shall be suspended if the circumstances indicated in paragraph 1 of this Article occured or continued to exist during the whole period of the time-limit of the prescription.

Suspended prescription resumes its run from the day when the circumstance which conditioned such suspension ceases to exist. In that event, the remaining part of the time-limit shall be prolonged by six months; if the time-limit of prescription is shorter than six months, it shall be prolonged by the whole duration of the time-limit.

Article 1.130. Interruption of prescription

Prescription shall be interrupted by bringing an action within the procedure established by laws.

Prescription shall also be interrupted by actions of a debtor by which the debtor acknowledges his obligation to the creditor.

An interrupted time-limit of prescription shall be resumed from the moment when the cause of such interruption ceases to exist. An interruption of prescription resulting from bringing an action shall be resumed from the time when the judgement thereon acquires the authority of the final judgement (res judicata), provided that an identical claim can be forwarded from the disputed legal relationship. The period that expired before the interruption shall not be included into the new time-limit of prescription.

No interruption in the time-limit of prescription shall occur where the suit is discontinued by the court due to the fault of the plaintiff. Refusal to accept the complaint or its withdrawal by the plaintiff shall likewise have no effect of interrupting prescription.

If an action brought in criminal proceedings is discontinued, prescription commenced before this action was brought shall continue its run from the day when the verdict by which the action was discontinued becomes finally binding.

Article 1.131. Legal effects of the expiration of a time-limit of prescription

The expiration of a time-limit of prescription prior to the date of bringing an action shall serve as valid grounds for dismissal of the claim.

If the court acknowledges the time-limit of prescription as expired due to important reasons, the violated right must be protected and the expired time-limit restored.

Questions of the ownership of property, for revindication of which prescription has expired, shall be regulated by the provisions of Book Four of this Code.

The provisions regulating suspension, interruption and restoration of prescription (Articles 1.129 to 1.131 of this Code) shall likewise be applied in respect of abridged prescription except in cases where laws provide for otherwise.

Article 1.133. Consequences arising when a debtor performs an obligation after the expiration of a time-limit of prescription

Where a debtor performs his obligation after the expiration of the time-limit of prescription, he shall have not right to claim restitution even if at the time of the performance of his obligation he did not know that the time-limit of prescription had expired.

Article 1.134. Claims not subject to prescription

The following claims shall not be prescribed:

1) claims arising from the violation of personal non-property rights, except in cases established by laws;

2) claims of depositors for repayment of their accounts deposited in a bank or any other credit institution;

3) other claims in cases established by other laws.

Article 1.135. Application of prescription with respect to accessory claims

Expiration of prescription with respect to the principal claim shall have the same effect likewise on the accessory claims (penalty, pledge, suretyship, etc.), even though the prescription of the latter may not have expired.

PART V

EXERCISE AND PROTECTION OF CIVIL RIGHTS

CHAPTER VIII

PRINCIPLES OF EXERCISE OF CIVIL RIGHTS AND THE WAYS OF THEIR PROTECTION

Article 1.136. Grounds for the arisal of civil rights and duties

Civil rights and duties shall arise on the grounds established by this Code and other laws, also from actions performed by natural persons and organizations which, though not determined by laws, create civil rights and duties within the general principles and the meaning of the civil laws.

Pursuant to paragraph 1 of this Article, civil rights and duties shall arise:

1) from contracts and other transactions provided for by this Code and other laws, likewise from such transactions which might not be stipulated by the laws but not at variance with these laws;

2) from court judgements;

3) from administrative acts that cause civil legal effects;

4) as a result of creating intellectual property;

5) on the grounds damage, as well as on the grounds of the reception of property not due or of unjust enrichment;

6) on the grounds of events or actions (active or passive) to which the arising of civil legal effects is linked by laws.

Article 1.137. Enjoyment and exercise of civil rights and performance of civil duties

Persons shall freely enjoy their civil rights at their own discretion, including the right to protection.

Persons, while exercising their rights and performing their duties, must obey laws, respect rules of public welfare and principles of good morals, good faith, reasonableness and justice.

A person shall be forbidden to abuse his own right, i.e. there being no legal ground, no civil rights may be exercised in a manner or by means intended to violate other persons’ rights and interests protected by laws; or to restrict other persons in their rights and interests protected by laws; or with the intent of doing damage to other persons; or where this would be contrary to the purpose of the subjective right. Abuse of a right that causes injury to other persons shall be the grounds for the implementation of civil liability. A court may refuse to protect the subjective right of which the person abuses.

The exercise of civil rights may not be used in bad faith and with the intent of unlawfully limiting competition or in abuse of the dominating position in the market.

Civil rights shall be protected by the laws, except in cases when the exercise of these rights is inconsistent with their purpose, public order, good usages (bonus mores) or the principles of public morals.

A renouncement of exercise of a subjective civil right shall not abolish the civil subjective right, except in cases established by laws.

Article 1.138. Protection of civil rights

Civil rights shall be protected by the court acting within its competence and according to the procedure established by laws. The ways of protecting civil rights are the following:

1) acknowledgement of rights;

2) restoration of the situation that existed before the right was violated;

3) prevention of unlawful actions or prohibition to perform actions that pose reasonable threat of the occurrence of damage (preventive action);

4) ad judgement to perform an obligation in kind;

5) interruption or modification of a legal relationship;

6) recovery of pecuniary or non-pecuniary damage from the person who infringes the law and, in cases established by the law or contract, recovery of a penalty (fine, interest);

7) declaration as voidable of unlawful acts of the state or those of the institutions of local governments or the officials thereof in the cases established in paragraph 4 Article 1.3 of this Code;

8) other ways provided by laws.

Article 1.139. Self-defense

Self-defense may be exercised for the purposes of protecting one’s civil rights only in the events established by this Code.

Methods and means of self-defense must correspond to the nature of the unlawful act and cannot exceed the limits of self-defense that exist in every concrete event.

In exercising self-defense, the rights and freedoms of individuals must be respected, as well as the requirements of laws must be observed.

BOOK TWO

PERSONS

PART I

NATURAL PERSONS

CHAPTER I

PASSIVE AND ACTIVE CIVIL CAPACITY OF NATURAL PERSONS

SECTION ONE

PASSIVE CAPACITY

Article 2.1. The concept of passive civil capacity of natural persons

Every natural person shall have the full enjoyment of civil rights (passive civil capacity)

Article 2.2. Beginning and end of passive civil capacity of natural persons

Passive civil capacity of a natural person shall begin at the moment of his birth and end at the moment of his death.

The beginning of rights prescribed by law to a conceived but yet unborn baby shall depend on the act of its birth.

In the event of the impossibility to establish whether a baby was born alive or dead it shall be presumed that it was born alive.

Where certain ensuing legal consequences depend on the fact which of natural persons died at an earlier date and where it is impossible to establish the moment of the act of death of them each, it shall be presumed that the said natural persons died at the same time.

Article 2.3. Acts of birth and death of natural persons

The first independent breath shall be considered to be the act of birth of a natural person.

Full and irreversible stoppage of blood circulation or stoppage of all brain functions shall be considered to be the act of death of a natural person.

Criteria for stating the acts of birth or death shall be prescribed by law.

Article 2.4 Content of the passive civil capacity of natural persons

According to law, natural persons shall be entitled to property as the object of private ownership and shall enjoy the right to engage in commercial activities, establish enterprises or other legal entities, inherit property and bequeath it, choose a sphere of activities and residence, to have invention or industrial sample rights as well as other property and individual non-property rights, which are protected by the civil law.

Natural persons who, in accordance with the procedure established by the law, are engaged in commercial activities shall be deemed to be entrepreneurs.

Every person engaged in business or practising of his profession shall have to administer his property and everything related to his undertaking or practising of his profession as well as to safeguard documents and other information about his property, undertaking or practising of his profession in the manner, which would enable every person, having a legal interest, at any time, to receive comprehensive information about the property rights and obligations of the person in question.

SECTION TWO

ACTIVE CAPACITY

Article 2.5. Active civil capacity of natural persons

On attaining full age, i.e. when a natural person is eighteen years of age, he, by his acts, shall have full exercise of all his civil rights and shall assume civil obligations.

Where the law provides for the possibility of a natural person to enter into marriage before he is eighteen, the person, who has not yet come of the given age, shall acquire full active civil capacity at the moment of entering into marriage. If at a later date this marriage is dissolved or nullity of marriage is declared for reasons not related to the age of the parties to marriage a minor shall not loose his full active civil capacity.

Article 2.6. Prohibition to impose restrictions on the passive or active civil capacity of Natural Persons on the Grounds which are not Prescribed by Law.

Restrictions on the passive or active civil capacity may not be imposed on anyone in any other manner except by express provision of law.

Transactions, acts of public or municipality institutions or officials, which impose restrictions on the passive or active civil capacity, are deemed to be null and void except in cases where the said transactions and acts are prescribed by law.

Article 2.7. Active civil capacity of minors under fourteen years of age

Contracts on behalf and in the name of minor’s under fourteen years of age name shall be concluded by their parents or guardians.

Upon entering into contracts and enforcing them parents and guardians shall have to act exceptionally in the interest of minors. Rights and obligations of parents and guardians in administering the property of minors are laid down in the provisions of Book three of the given Code.

Minors under fourteen years of age shall enjoy the right to enter alone into contracts to meet their ordinary and usual needs, conclude contracts aiming at gratuitous personal gain, as well as conclude contracts related to the use of their own earnings or money provided by their legal representatives or other persons if the said contracts fail to have a prescribed notarial or any other specific form.

Liability of legal representatives for contractual obligations of minors, who are under fourteen years of age, shall be prescribed by law if they fail to prove that they are not at fault for the breach of the said obligations.

Where a contract concluded by a minor under fourteen years of age is not recognised to be null and void and where the said person becomes legally capable, the other party to the contract may apply in writing to the party to the contract, who has become legally capable, and request the approval of the contract within the time limits, which may not be shorter than one month, determined in the application. Where the person fails to notify about his refusal to approve the contract within the proposed time limits, he shall be deemed to have approved the contract.

Article 2.8. Active civil capacity of minors over fourteen and under eighteen years of age

Minors over fourteen and under eighteen years of age shall enter into contracts with the consent of parents or guardians. The form of consent shall have to correspond to the form of the contract concluded. Contracts concluded without the consent of legal representatives shall be deemed valid if the consent of the legal representative is given after the contract has been concluded.

Minors over fourteen but under eighteen years of age, apart from the rights laid down in paragraph 3 of Article 2.7, shall have the right to dispose of their income and property acquired for that income, implement copyright to their works, inventions, industrial design as well as the right to enter into contracts alone to meet their ordinary and usual needs.

Where there are sufficient grounds, the court may be called upon to rule on an application filed by child care institutions or other interested persons to impose restrictions on or divest minors, who are over fourteen but under eighteen years of age, of the right to dispose independently of their income and property.

The right of minors over fourteen but under eighteen years of age to make deposits in credit institutions and dispose of them shall be prescribed by law.

Minors over fourteen but under eighteen years of age shall alone be liable for their contractual obligations.

Article 2.9. Emancipation of minors

Where a minor is sixteen years of age the court may emancipate him after he or his guardian , parents, institutions of guardianship or he himself has filed a declaration to that effect with the court if there are sufficient grounds to believe that he may exercise all civil rights and discharge his obligations alone. In all cases a minor has to give his consent to be emancipated.

The court may annul minor’s emancipation on the request of parents or child care institutions in the event that exercising his rights and discharging his obligations a minor causes damage to his own or other persons’ rights or lawful interests.

SECTION THREE

DECLARATION OF INCAPACITY OR LIMITATION OF CAPACITY OF A NATURAL PERSON

Article 2.10. Declaration of incapacity of a natural person

Natural person who as a result of mental illness or imbecility is not able to understand the meaning of his actions or control them may be declared incapable. The incapable person shall be placed under guardianship.

Contracts on behalf and in the name of the person, who was declared incapable, shall be concluded by his guardian. Rights and obligations of a guardian are laid down in the provisions of Book Three of the given Code.

Where a person who was declared incapable gets over his illness or the state of his health improves considerably the court shall recognise his capacity. After the court judgement becomes res judicta, guardianship to the said person shall be revoked.

The spouse of the person, parents, adult children, care institution or a public prosecutor shall have the right to request the declaration of person’s incapacity by filing a declaration to the given effect. They shall also have the right to apply to the court requesting the declaration of person’s capacity.

Article 2.11. Limitation of active civil capacity of natural persons

Where natural persons abuse alcoholic beverages, drugs, narcotic or toxic substances the court may impose restrictions on their civil capacity. After person’s capacity has been imposed limitations , he shall be placed under guardianship. Rights and obligations of a guardian are laid down in the provisions of Book three of the given Code.

Upon imposition of a limitation on a person’s capacity he may enter into contracts related to the disposition of his property, receive his salary, pension or any other income and dispose of it only with the consent of his guardian , with the exception of contracts, which he concludes to meet his ordinary and usual needs. Person whose capacity has been imposed limitations may not without the consent of his guardian curator:

1) borrow and lend money, when the sum exceeds two average monthly wages (without deductions);

2) extend a guarantee or offer a surety to other person;

3) conclude contracts of alienation or encumbrance of rights to his property ;

4) conclude an arbitration agreement;

5) file a statement of claim related to that part of his active civil capacity where his active capacity is limited;

6) come into inheritance or disclaim an inheritance;

7) conclude a contract for the construction of a building (apartment) or major repairs;

8) conclude a contract of tenancy or a loan-for-use contract;

The court may request the consent of the guardian curator to conclude other contracts, which are not laid down in paragraph 2 of the given Article.

Where the reasons for which person’s capacity was imposed limitations are no more valid the court shall lift the limitations on person’s capacity. After the court judgement has come into force, guardianship to a person under which he has been placed shall be annulled.

A person of full age who has limited capacity shall be alone liable for his contractual and non-contractual obligations.

A request to impose limitations on person’s civil capacity may be filed by the spouse of the said person, his parents, adult children, institution of guardianship or the public prosecutor. The person whose capacity was imposed limitations shall also have the right to apply to the court requesting to lift the limitations on his capacity.

Provisions of the articles of Part VII of Book Three of the given Code are applied mutatis mutandis to relations, arising in the exercise and protection of the property and non-property rights of an incapable natural person or a natural person of limited capacity.

SECTION FOUR

DOMICILE AND RESIDENCE OF A NATURAL PERSON

Article 2.12. Domicile of a Natural Person

Being an expression of person’s relationship with the state or part of its territory, domicile of a natural person shall be that state or its part, in which he permanently or ordinarily resides, regarding that state or its part to be the seat of his personal, social and economic interests.

A natural person is deemed to be domiciled in the Republic of Lithuania when of his own will he establishes and maintains the only or principal residence with the intention to make it a seat of his personal, social and economic interests. This intention, inter alia, may manifest itself by person’s actual presence on the territory of the Republic of Lithuania as well as the establishment of personal or business relations between him and the persons of the Republic of Lithuania or by some other criteria.

A natural person may have only one domicile. A person called to a temporary or revocable public office shall retain his domicile.

Domicile of a natural person shall be deemed unchanged until he changes it to another domicile.

Domicile of a married person shall not depend on the domicile of his spouse, although the domicile of one of the spouses is the fact, which has to be taken into consideration in establishing the domicile of the other spouse.

Article 2.13. Domicile of Legally Incapable Natural Persons

Domicile of legally incapable natural person shall be deemed to be the domicile of his guardian if the guardian and his ward reside in the same state.

Where a legally incapable person resides in a different from his guardian state and the said state is the seat of personal, social and economic interests of the legally incapable person he shall be deemed to be domiciled in that state.

Article 2.14. Domicile of Juvenile Natural Persons

1.Domicile of minor natural persons shall be deemed to be the domicile of their parents or guardians (foster parents).

2.Where parents of a minor natural person fail to have a common domicile, the domicile of a minor shall be deemed to be the domicile of one of his parents with whom the minor resides most of the time, unless the court has established the domicile of a minor with one of his parents.

Article 2.15. Right of the Parties to the Contract to Choose Domicile

The parties to a contract shall enjoy the right to choose, in writing, domicile with the view to the performance of the contract and the exercise of the rights arising from the said contract.

Article 2.16. Place of Residence of a Natural Person

1.The residence of a person shall be the place where he ordinarily resides.

2.Where a person has more than one residence, the seat of his principal establishment (where the person has property or a major part of property, where he has his job or where he lives the longest) shall be deemed to be his principal residence. In such case person’s principal residence shall be taken into consideration in establishing his domicile.

3.A person, whose domicile cannot be determined with certainty in accordance with the criteria laid down in Article 2.12 of the given Code, shall be deemed to be domiciled at the place of his residence. This rule shall, too, be applied to refugees from the state, which was their domicile unless they were domiciled in the Republic of Lithuania in accordance with the provisions of Article 2.12 of the given Code.

Article 2.17. Criteria for the Establishment of Residence

Length and continuity of actual residence at the place, data on person’s residence in public registers as well as his own public statements about his residence shall be taken into account in determining residence of a natural person.

A person whose residence is unknown or cannot be determined with certainty shall be deemed to live at the place of his last known residence.

A natural person must notify, in writing, the other party to the contract as well as his creditors or debtors about the change of residence. Where a person fails to perform this obligation the other party to the contract and creditors shall have the right to send notifications and perform other acts at the place of his last known residence.

SECTION FIVE

ACTS OF CIVIL STATUS

Article 2.18. State Registration of Acts of Civil Status

The state conducts mandatory registration of the following acts of civil status:

1) birth of a person;

2) death of a person;

3) entering into marriage;

4) dissolution of marriage

5) adoption;

6) recognition and establishment of parenthood;

7) change of the first name and surname;

8) change of designation of sex of a person;

9) partnership.

Article 2.19. The Order of Registration of Acts of Civil Status

Acts of civil status, except partnership, shall be registered in the registry offices by making respective entries into the register of civil status and issuing to the person the certificate of a respective entry of the act.

The procedure of registration of acts of civil status, alterations of the acts of civil status, rectification and reconstitution of acts is established in Book Three of the given Code.

PART TWO

ENJOYMENT AND EXERCISE OF SPECIFIC CIVIL RIGHTS OF NATURAL PERSONS

Article 2.20. Right to a Name

Every natural person shall enjoy the right to a name. Right to a name includes a right to a surname, name (names) and pseudonym. It shall be prohibited to gain rights and assume obligations under the cover of other person’s name.

A natural person shall have the right to use his full or abbreviated name (names) and request other persons not to use and not to act in his name without his authorisation.

The basis and the procedure for the change of name and surname shall be provided by law.

Having changed his surname or name a natural person must inform his debtors and creditors thereof. Where the person fails to perform this obligation he shall run the risk of negative consequences ensuing after his failure to notify about the change of his name or surname.

Article 2.21. Protection of the Right to a Name

A natural person whose right to a name has been infringed as a result of other person’s unlawful acts in his name or some other mode of unlawful appropriation of his name or he is prevented from using it, shall have the right to apply to court and request to oblige the guilty person to discontinue the said acts and redress the property and non-pecuniary damage incurred on him by such unlawful acts.

After the death of a natural person such claim may be presented by his spouse, parents or children.

Article 2.22. Right to an Image

Photograph (or its part) or some other image of a natural person may be reproduced, sold, demonstrated, published and the person may be photographed only with his consent. Such consent after natural person’s death may be given by his spouse, parents or children.

Where such acts are related to person’s public activities, his official post, request of law enforcement agencies or where a person is photographed in public places, consent of a person shall not be required. Person’s photograph (or its part) produced under the said circumstances, however, may not be demonstrated, reproduced or sold if those acts were to abase person’s honour, dignity or damage his professional reputation.

Natural person whose right to image has been infringed enjoys the right to request the court to oblige the discontinuance of the said acts and redressing of the property and non-pecuniary damage. After person’s death, such claim may be presented by his spouse, children and parents.

Article 2.23. Right to Privacy and Secrecy

Privacy of natural person shall be inviolable. Information on person’s private life may be made public only with his consent. After person’s death the said consent may be given by person’s spouse, children and parents.

Unlawful invasion of person’s dwelling or other private premises as well as fenced private territory, keeping his private life under observation, unlawful search of the person or his property, intentional interception of person’s telephone, post or other private communications as well as violation of the confidentiality of his personal notes and information, publication of the data on the state of his health in violation of the procedure prescribed by laws and other unlawful acts shall be deemed to violate person’s private life.

Establishment of a file on another person’s private life in violation of law shall be prohibited. A person may not be denied access to the information contained in the file except as otherwise provided by the law. Dissemination of the collected information on the person’s private life shall be prohibited unless, taking into consideration person’s official post and his status in the society, dissemination of the said information is in line with the lawful and well-grounded public interest to be aware of the said information.

Public announcement of facts of private life, however truthful they may be, as well as making private correspondence public in violation of the procedure prescribed in paragraphs 1 and 3 of the given Article as well as invasion of person’s dwelling without his consent except as otherwise provided by the law, keeping his private life under observation or gathering of information about him in violation of law as well as other unlawful acts, infringing the right to privacy shall form the basis for bringing an action for repairing the property and non-pecuniary damage incurred by the said acts.

Where the said acts are committed on the basis of reasoned judgement of the court, restrictions imposed on the publication and collecting of information about the person which are laid down in the provisions of paragraphs 1 and 3 of the given Article shall not be applied.

Article 2.24. Protection of Honour and Dignity

A person shall have the right to demand refutation in judicial proceedings of the publicised data, which abase his honour and dignity and which are erroneous as well as redress of the property and non-pecuniary damage incurred by the public announcement of the said data. After person’s death this right shall pass on to his spouse, parents and children if the public announcement of erroneous data about the deceased person abases their honour and dignity as well. The data, which was made public, shall be presumed to be erroneous as long as the person who publicised them proves the opposite.

Where erroneous data were publicised by a mass medium (press, television, radio etc.) the person about whom the data was publicised shall have the right to file a refutation and demand the given mass medium to publish the said refutation free of charge or make it public in some other way. The mass medium shall have to publish the refutation or make it public in some other way in the course of two weeks from its receipt. Mass medium shall have the right to refuse to publish the refutation or make it public only in such cases where the content of the refutation contradicts good morals.

The request to redress the property or non-property non-pecuniary damage shall be investigated by the court irrespective of the fact whether the person who has disseminated such data refuted them or not.

Where a mass medium refuses to publish the refutation or make it public in some other way or fails to do it in the term provided in paragraph 2 of the given Article, the person gains the right to apply to court in accordance with the procedure established in paragraph 1 of the given Article. The court shall establish the procedure and the term for the refutation of the data, which were erroneous or abased other person’s reputation.

The mass medium, which publicised erroneous data abasing person’s reputation shall have to redress property and non-pecuniary damage incurred on the person only in those cases, when it knew or had to know that the data were erroneous as well as in those cases when the data were made public by its employees or the data was made public anonymously and the mass medium refuses to name the person who supplied the said data.

The person who made a public announcement of erroneous data shall be exempted from civil liability in cases when the publicised data is related to a public person and his state or public activities and the person who made them public proves that his actions were in good faith and meant to introduce the person and his activities to the public.

Where the court judgement, which obliges the refutation of erroneous data abasing person’s honour and dignity, is not executed , the court may issue an order to recover a fine from the defendant for each day of default. The amount of the fine shall be established by the court. It shall be recovered for the benefit of the defendant irrespective of the redress for the inflicted damage.

Provisions of the given article shall, too, be applied to protect the tarnished professional reputation of a legal person.

Provisions of the given article shall not be applied to those participants of judicial proceedings who are not held responsible for the speeches delivered at court hearings or data made public in judicial documents.

Article 2.25. Right to the Inviolability and Integrity of the Person

A natural person shall be inviolable. No natural person may be made to undergo scientific or medical test or examination against his will and without his free consent (in cases of person’s incapability – without consent of his legal representative). Such consent shall be given in writing.

Intervention into a human body, removal of parts of his body or organs shall be possible only with his consent. Consent to a surgical operation shall be given in writing. Where a person is incapable his guardian shall give his consent, in the event of castration, sterilisation, abortion, operation, removal of organs of an incapable person, however, authorisation of the court shall be necessary. Such consent shall not be necessary in emergency cases when person’s life is endangered and has to be saved while the person himself is unable to express his will.

A natural person may determine, in writing, the nature of his funeral and the disposal of his body after his death.

The procedure for the donation and transplantation of human tissues and organs is established in a separate law.

Human body, its parts or organs and tissues may not become subjects of commercial contracts. Such contracts shall be deemed null and void.

The person whose right to the inviolability of and integrity of his person has been infringed shall enjoy the right to request the guilty persons to redress property and non-pecuniary damage incurred on him.

Article 2.26. Prohibition to Restrict the Freedom of a Natural Person

Freedom of a natural person shall be inviolable. A capable person may be placed under any supervision or imposed any restrictions only after his consent has been given as well as in other cases prescribed by law.

Where a person’s life is endangered or he has to be hospitalised to protect the public interests person’s consent to the medical care shall not be required.

Psychiatric examination of a person may be conducted only with his consent or after the authorisation of the court has been granted. Consent to conduct psychiatric examination of an incapable person may be given by his guardian or by the court. Where a person’s life is seriously endangered urgent psychiatric care may be taken without person’s consent.

A person may be confined in a psychiatric institution only with his consent and after the authorisation of the court has been granted. Where a person is seriously ill with a mental disease and where there is a real danger that his actions may cause considerable damage to his or other people’s health or life and property, the person may be hospitalised in a compulsory manner for the period not exceeding two days. Compulsory hospitalisation may be extended only after the authorisation of the court in accordance with the procedure prescribed by law has been granted. Where a person is incapable, his guardian may give his consent to the said person’s compulsory hospitalisation for the period not exceeding two days. Compulsory hospitalisation of an incapable person may be extended only after the authorisation of the court following the procedure prescribed by law has been granted.

Persons who unlawfully imposed restrictions on the freedom of a natural person shall have to redress property and non-pecuniary damage incurred on the said person.

Article 2.27. Right to the Change of the Designation of Sex

An unmarried natural person of full age enjoys the right to the change of designation of sex in cases when it is feasible from the medical point of view. The application to the given effect shall have to be made in writing.

The conditions and the procedure for the change of designation of sex shall be prescribed by law.

CHAPTER THREE

RECOGNITION OF PERSON’S ABSENCE OR DECLARATORY JUDGEMENT OF DEATH

Article 2.28 Recognition of person’s absence

Where for the period of one year in person’s domicile there is no information about his whereabouts the court may recognise the person to be an absentee.

Where there is no possibility to establish the day when the last data about an absentee have been received, the first of January of the following year shall be deemed to be the beginning of person’s absence.

Article 2.29. Protection of the Property of an Absentee

After application of the interested persons or the public prosecutor has been filed, the court shall appoint a temporary administrator of absentee’s property. Absentee’s spouse, close relatives or person’s who are motivated to preserve his property may be appointed temporary administrators. The temporary administrator must take the inventory of the property and take measures to safeguard it. The court shall establish the amount of remuneration for the administrator’s services with the exception of cases where the temporary administrator is person’s spouse or a close relative. They shall fulfil the said functions free of charge.

Temporary administrator shall administer the property, shall maintain the persons whom the absentee is obliged to maintain and shall pay the absentee’s debts. Temporary administrator shall have to obtain the authorisation of the court to dispose of the property, mortgage it or restrict the right to property in some other manner.

Where the absentee’s property is an enterprise the court shall appoint its administrator. The administrator shall act in his owner’s name.

Where the court gives a judgement that the person is recognised an absentee, a permanent administrator to his property shall be appointed by the court judgement.

A person may be appointed an administrator to the property only with his consent.

Article 2.30. Revocation of the Judgement to Recognise the Person an Absentee

In the event that an absentee returns or his whereabouts become known the court shall revoke its judgement to recognise the person an absentee and the administration to his property.

Revenues received by the administrator from the property of the absentee shall be recovered by the owner of the property who has returned and who has to reimburse the property administrator for all expenses related to the administration thereof.

Article 2.31. Declaratory Judgement of Death

In the event that no information on person’s whereabouts is obtained in his domicile for a period of three years and where he disappeared under such circumstances, which posed a mortal threat or give the grounds to suspect that he was killed in an accident, and no information about the person has been obtained for a period of six months, a declaratory judgement of natural person’s death may be pronounced. The beginning of the said term is established in accordance with the rules laid down in paragraph 2 of Article 2.28 of the given Code.

A soldier or other person who disappeared as a result of military actions may in judicial proceedings be declared dead but not earlier than two years as of the day of the end of military actions.

A declaratory judgement of death may be pronounced for a person irrespective of the fact whether he was or was not recognised an absentee.

The date of death for a person for whom a declaratory judgement of death was pronounced shall be deemed the day when the court judgement becomes res judicata . Where a declaratory judgement of death is pronounced for a person who disappeared under such circumstances, which posed mortal threat or give grounds to suspect that he was killed in an accident the court may consider the alleged day of the accident to be the date of his death.

Specific location pointed out in the court judgement shall be considered to be the location of such person’s death. Where it is impossible to establish a specific location of person’s death the last known location of his whereabouts is deemed to be the location of his death.

From the point of view of person’s civil rights and obligations, pronouncement of a declaratory judgement of his death shall equal the act of person’s death.

Article 2.32. Consequences of the Return of a Person who was Declared Dead

Where a person who was declared dead returns or his whereabouts become known the court revokes its judgement to declare the person dead.

The person who has returned shall not have the right to request the recovery of his property, which has been inherited after a declaratory judgement of death was pronounced. However, in cases where a person was absent for serious reasons he shall enjoy the right, irrespective of the time of his return, to request the recovery of his property which is in possession of his heirs.

A person who has returned shall also enjoy the right to request either the recovery of his property, which was gratuitously received by the third persons, or its value. He shall have, however, to compensate the person, who, in good faith, was in possession of his property, for all losses related to the recovery of the said property or its value.

PART II

LEGAL PERSONS

CHAPTER IV

GENERAL PROVISIONS

Article 2.33. Concept of a Legal Person

A legal person shall be an enterprise or an organisation which has its business name, which may in its name gain and enjoy rights and assume obligations as well as act as a defendant and as a plaintiff in courts.

Provisions of the PART II of the given book shall be applied to individual juridical forms of legal persons except as otherwise provided by the provisions of the given Code.

Article 2.34. Public and Private Persons

Legal persons shall be divided into public and private persons.

Public legal persons shall be legal persons established by the state or municipalities, their institutions or other non-profit-seeking persons whose goal is to meet public interests (state and municipality enterprises, state or municipality institutions, public institutions, religious communities, etc.).

Chapter VII of the given book shall be applied to the public legal persons in a subsidiary manner.

Chapter IX of the given book shall not be applied to the public legal persons.

Article 2.35. State and Municipalities

The state and municipalities shall be legal persons.

State and municipality institutions the existence whereof is prescribed by the Constitution of the Republic of Lithuania shall be legal persons in the cases prescribed by law.

With the exception of Articles 2.36, 2.74, 2.76, 2.80, 2.84, 2.85 Provisions of the Part II of the given book shall not be applied to the state and municipalities.

State and municipality institutions specified in paragraph 2 of the given Article shall file with the register of legal persons documents and data, laid down in Articles 2.46 and 2.66 of the given Code.

Article 2.36. Participation of the State and Municipalities in Civil Relations.

State, municipalities and their institutions shall be subjects of civil relations subject to the same grounds as other participants thereof.

The state and municipalities shall gain civil rights, assume civil duties and implement them through respective public and municipality administration institutions.

Article 2.37. Religious Communities and Associations

Traditional religious communities and associations shall be legal persons. Other religious communities and associations gain the rights of a legal person in accordance with the procedure established in Chapter V of the given book as well as in other laws.

Structural units of religious communities and associations, which pursuant to the regulations of communities and associations, statutes or other norms fulfil the requirements provided in Article 2.33 of the given Code, shall be legal persons. These structural units shall file documents, testifying to their compliance with the requirements specified in the given paragraph, with the register of legal persons.

Religious communities and associations and their structural units, which enjoy the rights of a legal person, shall act pursuant to their regulations, statutes and other norms inasmuch as they do not infringe the laws, and only Chapters IV and VI , Articles 2.84, 2.85 shall be applied to the said legal persons as well as Chapter V but only inasmuch as it fails to contradict the provisions of paragraph I of the given Article.

Article 2.38. Trade Unions

Where the requirements of paragraph 2 of the given Article are fulfilled trade unions shall be considered to be legal persons.

A trade union shall be formed when it has no less than 30 founders or when an enterprise, an institution or an organisation has no less than 30 founders and they account for no less than one fifth of all employees (while one fifth would account for no less than three employees) and if the general meeting of the trade union approves its statute and elects its managing bodies.

Citizens of the Republic of Lithuania or natural persons domiciled in the Republic of Lithuania who are not younger than fourteen years of age and are employed on the basis of labour contracts or some other basis may be founders of a trade union.

Provisions of Chapter V of the given book shall be applied to trade unions inasmuch as they fail to contradict the provisions of paragraph 1 of the given Article. Trade unions shall file documents testifying to their compliance with the requirements laid down in paragraph 2 of the given Article with the register of legal persons.

Article 2.39. Business Name of a Legal Person

A legal person shall possess its business name enabling to distinguish it from other legal persons.

Business name of a legal person shall be its property, which, however, may not be sold or conveyed in any other manner to become the property of the other person separately from the legal person.

Business name of a legal person may not contradict the public order or good morals or mislead the society as to its incorporator, co-owner, registered office, purpose of activities, juridical form, identity of the legal person or similarity to business names of other legal persons, business names of foreign enterprises, institutions and organisations, as well as trademarks and service marks which are familiar to the Lithuanian society. Business name of a legal person may not mislead by its identity or similarity to the recognised well-known trademarks and service marks which were submitted for registration, and were registered prior to the said legal person.

Where provisions of paragraph 3 of Article 2.46 of the given Code must be applied, business name of a legal person shall not be registered separately and shall be protected as of the day on which an application for the registration of a legal person is filed with the register of legal persons or a legal act has been adopted.

Regulations of the register of legal persons may establish additional requirements for the business name of legal persons.

Article 2.40. Composition of the Business Name of Legal Person

Business name of a legal person is composed of words or word-combinations used in their figurative or direct meaning.

Business name of a legal person shall be composed by taking into consideration the norms of standard Lithuanian and shall not be composed of a generic word (or words) denoting directly the sort of objects or services of activity or a single toponym or of some other word which fails to possess a distinctive feature.

Business name of a legal person may be composed only of letters, which may not be understood as words and numerals or their combinations only in cases when such business name is customary in the society. Where the consent has been given, business name of a legal person which is related to a foreign legal person or other organisation may be composed in such manner which would make the said name identical or similar to the business name of a foreign legal person or other organisation.

Article 2.41. Business Name of a Legal Person which is in the Process of Incorporation

Incorporators of a legal person may apply to the register of natural persons and request to make a temporary entry of the business name of a legal person, which is in the process of incorporation, in the register of legal persons.

Business name of a legal person, which is in the process of incorporation, shall be subject to the same rules as the business name of a legal person with the exception of paragraph 4 of Article 2.39 and Article 2.42 of the given Code.

Entry of a business name of a legal person, which is in the process of incorporation shall be made in the register of legal persons for the period of six months and upon its expiry shall be deleted without prior notification thereof to the founders of the legal person.

Article 2.42. Right to the Business Name of a Legal Person

It shall be prohibited to gain rights and assume obligations by using other legal person’s business name as a cover or to use other legal person’s business name without the latter’s consent.

Where legal person’s right to a business name has been infringed by other person’s unlawful use of the said person’s business name or where the other person has or uses a business name, which fails to meet the requirements laid down in Article 2.39 of the given Code, the legal person shall have the right to apply to the court and request the court to oblige the legal person to discontinue the said unlawful acts or alter the business name and to redress the property and non-pecuniary damage incurred by the said acts, while in the event that provisions of paragraph 1 of the given Article have been infringed – to request the person to return everything he has acquired by using other person’s name as a cover or using the said name without the latter’s consent.

Article 2.43. Alteration of the Business Name of a Legal Person

Prior to the alteration of the business name a legal person shall have, one time, to make a public announcement thereof or notify, in writing, all creditors of the legal person.

Where a legal person fails to discharge its obligation stipulated in paragraph 1 of the given Article he shall have to suffer the ensuing negative consequences related to its failure to notify about the alteration of its business name.

The business name of a legal person shall be altered alongside with the alteration of incorporation documents, which are filed with the Register of legal persons only after the requirements of paragraph 1 of the given Article have been fulfilled.

A legal person shall have the right to apply to the Register of legal persons and request to make a temporary entry in the Register of legal persons of the planned new business name. In such cases the provisions of Article 2.41 of the given Code shall be applied mutatismutandis

Article 2.44. Information Supplied in the Documents of a Legal Person

Documents of a legal person used in his business relations with other subjects (business letters, invoices, trade documents etc.) shall have to supply the following information:

1) business name of a legal person;

2) juridical form of a legal person;

3) head office of a legal person;

4) code of a legal person;

5) Register which stores and safeguards the data on the given legal person.

Where a legal person has declared bankruptcy or is liquidated the information thereof must be indicated in the documents specified in paragraph 1 of the given Article.

Where a legal person has to pay value-added tax, the payer’s code shall have to be indicated in the documents specified in paragraph 1 of the given Article.

Where the assets of a legal person are mentioned in the documents specified in paragraph 1 of the given Article, authorised capital and the amount of paid-in authorised capital shall have to be indicated as well.

Article 2.45. Member of the Legal Person

A member of a legal person (shareholder, member, part-owner etc.) shall be the person, which enjoys the right of ownership to the property of a legal person, or the person, who, irrespective of his failure to maintain the right of ownership to the property of a legal person, acquires the obligatory rights and duties related to the legal person.

Article 2.46. Documents of Incorporation of a Legal Person

Legal persons shall act in accordance with the documents of their incorporation: articles of incorporation, incorporation contract or in cases provided by law – general regulations. According to the provisions of the given Code articles of incorporation shall have equal status with the regulations, statutes and other incorporation documents of legal persons.

Provisions of incorporation documents shall be valid inasmuch as they do not contravene the mandatory provisions of laws.

Public legal persons may act in accordance with the law or, where the law provides for it, in accordance with the legal act on the incorporation of a public legal person adopted by the state or municipalities if the said act does not provide for the obligation of a public legal person to act in accordance with the statutes approved by the state or municipality institutions.

Where incorporation documents of a legal person are not filed with the Register of legal persons within six months after they have been drafted and where other laws fail to provide for a different time limit, they shall be deemed void.

Identity of signatures of natural persons who have signed the incorporation documents of a legal person shall have to be approved by a notary with the exception of derogations provided by the law.

Article 2.47. Articles of Incorporation of a Legal Person

Articles of incorporation and in the event that a legal person fails to have articles of incorporation – incorporation contract or general regulations, where a legal person acts in accordance with the general regulations, or a legal act, where a legal person acts in accordance with the legal act, shall have to supply the following information:

1) business name of a legal person;

2) juridical form of a legal person;

3) registered office of a legal person;

4) goals of activities of a legal person;

5) competence of the general meeting of members of a legal person and the procedure for its convening;

6) bodies of a legal person and the procedure for their formation and dissolution or, where the bodies are not formed and the legal person exercises its rights through a member of a legal person – member of a legal person;

7) the procedure for the alteration of the incorporation documents of a legal person;

8) where the term of activities of a legal person is restricted, the term of its activities;

9) other provisions laid down in the laws, the incorporator or a member of a legal person.

Goals of the activities of public legal persons shall have to be defined in a clear and comprehensive manner including the field and form thereof.

In the event that the procedure for the convening of the general meeting of a legal person’s members and its competence as well as the procedure for the formation and dissolution of other bodies of a legal person and their competence is identical to the procedure provided for by the law and where the given fact is indicated in the articles of incorporation, it shall not be indicated.

Article 2.48. Property of legal persons

Property of legal persons shall be administered, used and disposed of on the basis of the ownership right or the right of trust.

Property, which is administered, used and disposed of on the basis of the right of trust shall be owned by the incorporator of a legal person or its member on the basis of the ownership right.

Article 2.49. Registered Office of a Legal Person

Registered office of a legal person shall be the seat of its principal managing body. Registered office of a legal person shall be defined by indicating the address of the premises in which the head office is located.

Where the registered office of a legal person indicated in the register of legal persons, incorporation documents or the contract and the seat of its principal managing body fail to coincide, the third parties shall enjoy the right to consider the seat of its principal managing body to be the registered office of a legal person.

All correspondence with a legal person shall be deemed appropriate where the address of the registered office is used as well as where due regard of paragraph 2 of the given article is taken except as otherwise provided by a legal person.

Upon changing his registered office a legal person shall have to change its incorporation documents accordingly and register them.

Article 2.50. Contractual Liability of Legal Persons

A legal person shall be liable for his obligations by his property, which it owns on the basis of the ownership right or right of trust

A legal person shall not be liable for the obligations of its member and the latter shall not be liable for the obligations of the legal person with the exception of cases provided by the law and incorporation documents of a legal person.

Where a legal person fails to perform his obligations due to acts in bad faith of a member of the legal person, the member of a legal person shall, in a subsidiary manner, be liable for the obligations of a legal person by his property.

Legal persons shall be divided into persons of limited and unlimited civil liability. Where the property of a legal person of unlimited civil liability is not sufficient to discharge its obligations, a member of a legal person shall be liable for the said obligations. Personal (individual) enterprise and commercial partnership shall be legal persons of unlimited civil liability.

Article 2.51. Term of the Activities of a Legal Person

A legal person may be incorporated for a fixed or open-ended term. Date as well as presence or absence of certain conditions may be considered to be the term.

Where documents of incorporation of a legal person fail to indicate that the legal person has been incorporated for a fixed period of time such legal person shall be considered incorporated for an open-ended term.

Article 2.52. Financial Year of a Legal Person

Financial year of a legal person shall be the calendar year.

Any other period of twelve months may be considered to be the financial year of a legal person.

Where the financial year is changed, the end of the financial year shall be considered to be the end of the new financial year if the period from the beginning of the financial year to the end of the new financial year is not longer than eighteen months. Where such period is longer than eighteen months, transitional financial year shall be set and its beginning shall be the end of the previous financial year whereas the end of it – the beginning of the new financial year.

Upon the incorporation of a legal person, the first financial year of a legal person shall be the period from the day of its incorporation to the end of the financial year. With the expiry of the term of a legal person the period from the beginning of the financial year to the day of the expiry of the term of a natural person shall be considered to be the last financial year.

Financial year of a legal person may not be altered more frequently than one time in five years. Where a legal person changes its financial year for a financial year coinciding with the calendar year, the given provision shall not be applied.

Article 2.53. Branch Office of a Legal Person

Branch office of a legal person shall be its structural unit, which has its registered office and performs all or part of legal person’s the functions.

Branch office of a legal person shall not be a legal person. The legal person shall be liable for the obligations of the branch office and the branch office shall be liable for the obligations of the legal person.

Article 2.54. Regulations of the Branch Office of a Legal Person

Branch office of a legal person shall act in accordance with the regulations approved by a legal person. They must contain the following information:

1) business name of the branch office;

2) registered office of the branch office (address);

3) goals of activities of the branch office;

4) managing body of the branch office and its competence;

5) term of the activities of the branch office (where it is fixed

6) other provisions established by the law or a legal person.

Regulations of the branch office shall, too, provide information specified in Article 2.44 of the given Code on the founder of the branch office and on the managing body of a legal person, which enjoys the right to form or dissolve managing bodies of the branch office and make decisions on the legal status of the branch office.

Article 2.55. Regulation of Branch Offices

Provisions of PART II of the given book shall be applied to the branch offices and their activities inasmuch as they do not contradict the essence of a branch office and by taking due regard of peculiar provisions laid down in the given Article.

Documents of the branch office listed in Article 2.44 of the given Code shall also contain analogous information about the legal person, with the exception of information specified in paragraph 3 of Article 2.44 of the given Code in cases, where a foreign legal person or other organisation is the founder of the branch office.

Upon the registration of a branch office a foreign legal person or other organisation shall have to notify the Register of legal persons about the changes in the data of a legal person’s documents, which were filed with the register, and the legal status of a legal person, and present documents of annual financial accountability, including consolidated balance sheet, in cases where such accountability, according to the law, is applied to a foreign legal person or other organisation.

Article 2.56. Representative Office of a Legal Person

Representative office of a legal person shall be a unit of a legal person, which shall have its registered office enjoy the right to perform all operations specified in paragraph 2 of the given Article.

Representative office of a legal person shall have the right to represent the interests of a legal person and safeguard them, to enter into contracts as well as perform other operations in legal person’s name, to conduct import and export operations exclusively between foreign legal persons and other organisations, which have established the branch office or related enterprises, institutions or organisations and the branch office.

Representative office of a legal person shall not be a legal person.

Article 2.57. Regulations of a Representative Office of a Legal Person

1.Representative office of a legal person shall act pursuant to the regulations approved by a legal person which have to indicate:

1) business name of a representative office;

2) registered office of a representative office;

3) goals of activities of a representative office;

4) managing body of a representative office and its competence;

5) period of activities of a representative office where it is limited;

6) other provisions established by the law or a legal person.

2.Regulations of the representative office of a legal person shall also include information specified in Article 2.24 of the given Code about its founder and about the managing body which has the right to form and dissolve managing bodies and make decisions on the legal status of a representative office.

Article 2.58. Regulation of the Representative Office of a Legal Person

Provisions of Part II of the given book shall be applied to representative offices inasmuch as they do not contradict the essence of a representative office and by taking due regard of peculiar provisions laid down in the given Article.

Documents of a representative office listed in Article 2.44 of the given Code must also contain similar information about a legal person, with the exception of information specified in paragraph 3 of Article 2.44 of the given Code in cases, where the founder of a representative office is a foreign legal person or other organisation.

Upon registration of a representative office a foreign legal person or other organisation must notify the Register of legal persons about the alterations of data in documents of a legal person filed with the register and the legal status of a legal person, produce documents of annual financial accountability, including consolidated balance sheet, in cases, where such accountability is mandatory pursuant to laws applied to a foreign legal person or other organisation.

CHAPTER V

INCORPORATION OF A LEGAL PERSON

Article 2.59. Procedure for the Incorporation of a Legal Person

Legal persons shall be incorporated pursuant to the procedure established by the law and the given Code.

Article 2.60. Incorporators of a Legal Person

Incorporator of a legal person shall be a person who has concluded a contract for the incorporation of a legal person. Upon passing a respective law or, where it is provided for by the law, other legal act, the state, or, where it is provided by the law, a municipality, public or local self-government institutions upon passing a respective legal act, which forms the basis for the incorporation of a public legal person, shall, too, be considered the incorporators of a legal person.

Natural and legal persons may be incorporators of a legal person.

The law may provide for cases, where for the purpose of protection of public order or where retaliatory action is taken, a foreign legal person, other organisation or a foreigner may not be an incorporator or a member of legal persons.

Article 2.61. Contracts Concluded Prior to the Incorporation of a Legal Person

A special managing body of a legal person or some other body defined in the incorporation document shall have the right to approve contracts, which in a legal person’s name were concluded by other persons prior to the incorporation of a legal person. When such contract is concluded it should be indicated that it is concluded in a legal person’s name and in its interests. Where such reference fails to be included the person who has concluded the contract and the legal person whose managing body approved the contract concluded in its interest shall have solidarity obligation to discharge their contractual obligations.

Where such contract fails to be approved by the body of the legal person which was incorporated at a later date all obligations arising from the contract shall have to be discharged by the person who has concluded the said contract. Where such contract has been entered into by some persons and where a legal persons fails to approve it all persons shall have the solidarity obligation to discharge obligations arising from the said contract.

Article 2.62. Register of Legal Persons

Legal person shall have to be registered with the Register of legal persons.

Register of legal persons must be supplied with all data prescribed by the law on legal persons themselves and their activities (principle of disclosure).

A public institution prescribed by the law shall be the institution for the administration of the Register of legal persons (registrar of the register).

Article 2.63. Moment of Incorporation of a Legal Person

A legal person shall be deemed incorporated as of the moment of its registration with the Register of legal persons.

In cases prescribed by the law or laws, other legal act which formed the basis for the incorporation of public legal person may establish that a legal person is deemed incorporated after the act forming the basis for the incorporation has entered into force. In such cases the said legal act must contain the data laid down in Article 2.66 of the given Code and the said legal act has to be published and produced to the Register of legal persons.

Article 2.64. Registration of Legal Persons

A legal person shall be registered with the Register of legal persons after documents listed in paragraph 2 of the given Article have been produced except as otherwise provided by other laws in relation to cases established by the provisions of the given Code.

The following documents shall have to be produced to the Register of legal persons for the registration of a legal person:

1) application of the established form for the registration of a legal person;

2) incorporation documents of a legal person;

3) licence, where issuance of a licence prior to the incorporation of a legal person is provided for by the law;

4) documents verifying the authenticity of documents which are produced to the Register and the compliance of incorporation documents with the provisions of laws as well as documents verifying the fact that a legal person may be registered because contractual obligations assumed in the incorporation contract have been fulfilled and the circumstances prescribed by the law and incorporation documents have emerged.

5) document verifying the payment of a registration fee except in cases where a person is exempted from a registration fee.

6) other documents prescribed by the law.

A legal person shall be registered within 30 days as of the day on which all documents listed in Paragraph 2 of the given Article have been produced.

Regulations of the Register of legal persons shall establish the procedure for the registration of legal persons.

A legal person may be removed from the Register only on the expiry of the term of a legal person.

Article 2.65. Certificate of Registration and Code of a Legal Person

Upon registration of a legal person, the registrar of the Register shall issue a certificate of registration and shall give a legal person a code of a legal person.

12) dates of alterations in the data filed with the register and dates of the alteration of documents;

13) other data prescribed by the law.

Where legal persons the members whereof are liable for contractual obligations of a legal person are registered, additional information on a member, a natural person, of a legal person shall be furnished: name, surname, personal code, residence or business name of a legal person, juridical form, code and registered office.

Where the data, listed in paragraphs 1 and 2 of the given Article has been altered and where incorporation documents or other data listed in paragraphs 1 and 2 of the given Article has been altered, a legal person must file an application of the established form requesting the registration of the alterations with the Register of legal persons within thirty days as of the day the alterations have been made. Documents listed in point 4 paragraph 2 of Article 2.64 of the given Code and full text of the altered document, where the document has been altered, must be produced together with the application requesting the registration of the alterations.

The documents of the annual financial accountability of enterprises shall be produced to the Register (annual financial accountability) every year within thirty days as of the moment, when a legal person approves them in accordance with the procedure established by the law and incorporation documents of a legal person except as otherwise provided for by the law.

Alterations in the data listed in points 5-7 and 11 of paragraph 1 of the given Article as well as alterations of documents shall enter into force only upon their registration with the Register of legal persons with the exception of derogations provided by the law.

Article 2.67. Persons Responsible for the Production of Documents of a Legal Person and the Data of the Register to the Registrar of the Register

Managing body of a legal person shall be responsible for the timely production of documents of a natural person, data and other requested information to the Register of legal persons except as otherwise provided by the law or incorporation documents.

Article 2.68. Refusal to Register

The registrar may refuse to register a legal person or the alterations in the data and documents of a legal person only in cases where:

1) the application to register a legal person (alterations of data and documents to be registered with the register, removal of data) fails to conform to the established form or not all documents specified in Articles 2.63 and 2.64 are produced;

2) the term specified in paragraph 4 of Article 2.46 of the given Code has expired;

3) data and documents produced to the Register are not in conformity with one another, are vague or misleading;

4) form or content of the documents fail to conform to the requirements provided for by law.

Where obstacles for the registration of the produced documents and data arise, the registrar shall set a time limit for the elimination of defects. Where the defects are not eliminated within the established time limit and corrected documents are not produced to the registrar, the registrar makes a motivated decision to refuse the registration of a legal person (alterations in data or documents).

Decision to refuse registration of a legal person (data to be registered in the register or alterations in documents) shall be appealed to the court in accordance with the procedure established by the law.

Article 2.69. Rectification of the Register of Legal Persons

Errors in the Register of legal persons shall be rectified on the application of a legal person or a person whose data has been inserted in the Register or on the initiative of the registrar.

Upon the detection of an error in the Register, the registrar shall have, without delay, to notify, in writing, a legal person. Where a legal person fails to raise objections within the time limit set by the registrar for the rectification of the error, the registrar shall rectify the data in the register.

In the event that a legal person, the data whereof has been registered with the Register, requests the rectification of an error in the Register, the registrar shall have to rectify the data in the Register within three business days as of the day, on which the application and the documents verifying the facts have been received.

The registrar shall have to notify, where applicable, the persons who were given erroneous data about the rectification of the mistake in the Register.

Article 2.70. Liquidation of a Legal Person on the Initiative of the Registrar of Legal Persons.

Where a legal person registered with the Register fails to renew its data in the Register of legal persons within five years and where there are grounds to presume that the said legal person has stopped its activities or where an enterprise failed to produce documents of financial accountability, which were specified in paragraph 4 of Article 2.66 of the given Code for a period exceeding twenty four months and failed to inform the administrator of the Register of legal persons about the reasons thereof or where management bodies failed to make decisions due to the lack of quorum after the resignation of the members of managing bodies of a legal person and the situation persists for more than six months or where members of managing bodies of a legal person may not be contacted at the registered office of a legal person or locations, the addresses of which have been produced to the Register of legal persons, the registrar of the Register shall have the right to initiate liquidation of a legal person.

The registrar of legal persons shall send a notification about the pending liquidation of the legal person to the registered office of a legal person or to the addresses of the members of managing bodies of a legal person which were produced to the register of legal persons as well as make the public announcement of the said notification in the source provided for in the regulations of the register of legal persons.

Where within three months following the public announcement of the pending liquidation of a legal person the registrar of legal person fails to receive objections to the pending liquidation of a legal person he applies to the court requesting to put the legal person into liquidation.

Article 2.71. Publication of the Register of Legal Persons

Data of the Register of legal persons, documents stored in the register as well as any information supplied to the Register shall be made public.

A separate file shall be made up for each legal person. Documents produced to the Register, data and other information related to the given legal person shall be stored and safeguarded in the said file.

The data produced by the Register, copies of documents or information shall have a mark “attested abstract” (“attested copy”) except in cases where an applicant fails to request the said mark. The copies of the data stored in the register, of documents or information attested in the said manner shall have prima facie authority.

Every person shall have the right to receive, free of charge, oral information on the legal status of a legal person and restrictions imposed of his activities in accordance with the procedure established by the Register of legal persons.

Article 2.72. Procedure and Mode of Publication of the Data of the Register of Legal Persons

The registrar shall have to make a public announcement of the registration of a legal person, alteration of the data stored in the Register in accordance with the procedure established by the Register of legal persons and in the source designated by the said Register.

Copies of the data and documents stored in the Register of legal persons shall be issued pursuant to the procedure established by the regulations of the Register of legal persons.

Every person shall enjoy the right to be issued copies of any data, documents and information stored in the Register after a fee not exceeding the costs of the said work has been paid.

Data of the Register of legal person shall be issued free of charge:

1) to natural persons whose data are inserted in the Register – the Register stores the data about the said persons;

2) to judicial institutions – inasmuch as they need to discharge their direct functions;

3) to other State registers and information systems – on the data exchange basis.

a fee for the issuance of copies of the data and documents of legal persons shall not exceed the costs of the administration of the Register.

Article 2.73. Liability for Unlawful Refusal to Register a Legal Person and for Errors in the Register of Legal Persons

Where a legal person and the data produced to the Register or documents to be registered with the Register, are unlawfully refused registration a legal person shall have the right to seek a legal redress for the damage inflicted on him by the said actions.

Damage incurred by the actions specified in paragraph 1 of the given Article on a legal person as well as damage incurred on other persons in the administration of the Register of legal persons shall be redressed by the State. The said damage is recovered in judicial proceedings. Institution authorised by the State shall represent the State in civil cases for the award of damage.

CHAPTER VI

LEGAL CAPACITY OF LEGAL PERSONS

Article 2.74. Legal Capacity of Legal Persons

Private legal persons may be in possession of or achieve any civil rights and assume duties except those, which may emerge only when such characteristics of a natural person as gender, age and consanguinity are in place.

Public legal persons shall have a special legal capacity, i. e they may be in possession of or achieve only such civil rights and assume such duties, which are not at variance with their incorporation documents or goals of activities.

Provisions of paragraph 3 of Article 2.4 of the given Code shall be applied to legal persons mutatis mutandis.

Article 2.75. Restrictions on the Legal Capacity of Legal Persons

Legal Capacity of legal persons may not be imposed limitations in any other manner except as by express provision and procedure of law.

Legal Capacity of an individual legal person may be imposed limitations only by the court judgement.

Article 2.76. Prohibition of Discrimination

It shall be prohibited to establish in legal acts, for discrimination purposes, different rights, obligations or privileges for separate legal persons.

Article 2.77. Licensing of the Activities of Legal Persons

In cases provided by law legal persons may be engaged in a certain type of activities only after a licence has been granted in accordance with the procedure established by the law.

A legal person must be in possession of all licences (permits) which are defined in the law as a necessary prerequisite for its activities.

Article 2.78. Licensing Requirements

The Government approves licensing requirements for every licenced sphere of activities provided by law except as otherwise provided by other laws.

Licensing requirements shall indicate the following:

1) licenced activities;

2) licensing institution and its authority;

3) documents for the issuance of a licence;

4) procedure and term for the investigation of documents;

5) types of licences, conditions of their issuance, re-issuance of a licence;

6) forms of licences;

7) procedure for the registration of issued licences;

8) cases of refusal to issue a licence;

9) conditions of licenced activities;

10) procedure for the supervision of the observance of the conditions of a licence;

11) procedure and cases for the revocation and withdrawal of a licence.

Regulations of licensing may provide for other requirements and a different procedure.

Article 2.79. Issuance of a Licence

Where the requirements specified in the regulations of licensing are fulfilled an open-ended licence shall be issued.

Except as otherwise provided by law, licence for the engagement in a certain activity or a written motivated refusal to issue a licence shall be submitted to an applicant within thirty days as of the day on which the documents for the issuance of a licence were produced.

Refusal to issue a licence may not be based on the inexpediency of activities and has to be motivated.

Information on the issuance of a licence, its revocation and withdrawal shall be stored in the register of legal persons. The licensing authority must notify the register of legal persons about the issuance, revocation and withdrawal of licences in accordance with the procedure established by the regulations of the register of legal persons.

Upon the issuance of a licence a legal person must supply information specified in the licensing requirements and related to the licenced activities or conditions predetermining the issuance thereof and allow the institution for the supervision of licenced activities to verify it.

Stamp tax for the issuance of a licence shall not exceed the costs of the issuance of a licence and supervision thereof.

Article 2.80. Prohibition to Use Administrative Methods

Public or municipality institutions shall be prohibited, in cases not prescribed by law, to use methods of administrative regulation of the activities of legal persons.

Where, in accordance with the procedure prescribed by law, an emergency or martial law is declared or a certain territory is declared the region of disaster, legal persons must carry out the instructions of the Government or local self-government institution.

CHAPTER VII

BODIES OF A LEGAL PERSON

Article 2.81. Bodies of a Legal Person

Legal persons achieve civil rights, assume civil duties and implement them through their bodies which are formed and act in accordance with laws and documents of incorporation of legal persons

In cases prescribed by laws and incorporation documents legal persons may achieve civil rights and assume duties through their members.

Members of legal persons enjoy the right to institute an action at law requesting to prohibit the managing bodies of a legal person to enter into contracts which contravene the goals of the activities of a legal person or overstep the authority of a managing body of a legal person.

Only natural persons may be members of managing bodies of a legal person whereas both natural and legal persons may be members of other bodies.

Article 2.82. Authority and Functions of the Bodies of Legal Persons

Authority and functions of the natural persons’ bodies shall be established by the law and incorporation documents of a legal person, which regulate legal persons of a respective juridical form.

Where incorporation documents and laws regulating the activities of a legal person fail to provide a different structure of managing bodies, each legal person must have a single-person or a collegial managing body and the general meeting of members. Laws regulating individual juridical forms of legal persons may establish that an managing body and the general meeting of members may be considered to be the same body of a legal person.

A managing body shall be responsible for the financial accountability, convening of the general meeting of members of a legal person, production of documents and data to the register of legal persons, notification of the members of a legal person about the essential events, which are important for the activities of a legal person, organisation of the legal person’s activities, accounting of the members of a legal person and actions specified in paragraph 3 of Article 2.4 of the given Code, except as otherwise provided in laws regulating the activities of legal persons or incorporation documents of a legal person.

Decisions of the bodies of a legal person may, in judicial proceedings, be declared void where they contravene the imperative provisions of the law, incorporation documents of a legal person or principles of reasonableness and good faith. Where the decision infringes their rights or interests, action can be taken by the creditors of a legal person, a respective managing body of a legal person, member of a legal person or other persons prescribed by the law. Three-month limitation of actions period shall be set for the said actions. It shall be counted as of the day on which the defendant found out or had to find out about the contested decision where the given Code and other laws fail to set another term of limitation of actions or a different procedure for the challenging of the decision.

Article 2.83. Contracts Concluded in Overstepping the Authority of Managing Bodies of a Private Legal Person

Contracts concluded by the managing bodies of a private legal person in overstepping their authority shall impose obligations on a legal person except in cases where it is proved that concluding the contract the third person was aware or due to certain circumstances may not have failed to be aware of the fact that the contract has been entered into by a managing body of a legal person who was not authorised to conclude it.

Paragraph 1 of the given Article shall not be applied where quantitative representation has been established, i.e. only some members of a managing body together or a member of a managing body and a representative together are authorised to act in the name of a legal person. Quantitative representation shall have to be provided in the incorporation documents of a legal person, specified in the register of legal persons and publicised in accordance with the procedure established by the regulations of the register of legal persons.

Where a legal person fails to satisfy fully the claim of a third person, the person who has concluded the contract under circumstances laid down in paragraph 1 of the given Article shall take on subsidiary liability.

Article 2.84. Contracts Concluded in Overstepping the Authority of Managing Bodies of a Public Legal Person

Contracts concluded by administrative bodies of a public legal person in overstepping their authority shall not impose obligations on a legal person.

Where, at a later date, the person approves the contract, the contract shall become valid as of the day of its conclusion.

A person who, under the circumstances laid down in paragraph 1 of the given Article, has concluded a contract, which is not approved by a legal person, must redress the damage incurred on the third person, if he fails to prove that concluding the contract the third person was aware or due to certain circumstances may not have failed to be aware of the fact that the contract has been concluded in overstepping the authority of the managing body of a legal person.

Article 2.85. Public Announcement of the Authority

Publication and indication in the Register of legal persons of the authority of managing bodies of legal persons which was stipulated in incorporation documents shall not affect the application of the provisions of Articles 2.83 and 2.84.

Article 2.86. Equality of Members of Legal Person’s Managing Bodies

Members of legal person’s managing body shall enjoy equal rights and obligations with the exception of the case specified in paragraph 2 of Article 2.93 of the given Code.

Article 2.87. Duties of Members of Legal Person’s Managing Bodies

Member of a legal person’s body shall have to act in good faith and reasonable manner in respect of the legal person and members of other legal person’s bodies.

Member of a managing body of a legal person shall have to be loyal to the legal person and maintain confidentiality.

Member of legal person’s managing body shall have to avoid a situation where his personal interests are contrary or may be contrary to the interests of a legal person.

Member of a managing body of a legal person may not confuse the property of a legal person with his own property and, without consent of members of a legal person, use the property or the information, which he obtains in the capacity of a member of legal person’s body, for his personal gain or third person’s gain.

A member of a managing body of a legal person must notify other members of the managing body of a legal person about the circumstances laid down in paragraph 3 of the given Article and define their nature and, where applicable, their value. Such information shall have to be supplied in writing or included into the minutes of the meeting of legal person’s bodies.

A member of a managing body of a legal person may enter into a contract with a legal person being in the capacity of a member of the said person’s body. He shall have, without delay, to notify other bodies of a legal person about the said contract in accordance with the procedure established in paragraph 5 of the given Article or members of a legal person where incorporation documents of a legal person fail to provide explicitly for a different procedure of notification.

A member of a managing body of a legal person who fails to perform or performs improperly his duties specified in the given Article or incorporation documents must redress all damage incurred on a legal person except as otherwise provided by law, incorporation documents, or an agreement.

Article 2.88. Agreements on the Voting of the Members of a Legal Person

Members of a legal person may conclude an agreement on general voting at the meeting of the members of a legal person. Agreements on voting are null and void where an obligation is assumed:

1) to vote according to instructions received from the managing bodies of a legal person;

2) to vote for all proposals made by the managing bodies of a legal person;

3) to vote according to instructions or abstain from voting for certain remuneration.

An agreement on voting may establish that parties to the said agreement may grant an authorisation to a third person to vote at the general meetings of the members of a legal person in the name of the parties to the agreement on voting, and such authorisation may be revoked only in cases provided for in the said agreement.

Upon the issuance of the authorisation in accordance with the provisions of paragraph 2 of the given Article, the parties to the agreement are deprived of the right to vote or to grant authorisation to other persons to vote at the meetings of members of legal person for issues specified in the authorisation.

Where provisions of an agreement on voting have been infringed by one party to the agreement the court is authorised to oblige re-counting of the results of voting at the meeting of members of a legal person in accordance with the agreement on voting and reverse the decision taken at the meeting of members of a legal person in cases where voting in violation of the agreement was decisive in arriving or not arriving at a certain decision.

Article 2.89. Transfer of a Voting Right

A member of a legal person may transfer his right to vote at the general meeting of members of a legal person to other persons and establish the procedure and modes of exercising the voting right.

An agreement on the transfer of the voting right enters into force as of disclosure to a legal person of the data on the number of transferred votes, time limit of transfer, grounds for the entitlement to the voting right, member of a legal person who transfers the right and the person who achieves the right (inasmuch as is provided in incorporation documents of a legal person, laws or the established practice of a legal person).

A legal person must notify the member of a legal person who transfers his voting right and the person who achieves it as well as, at the nearest meeting of members of a legal person, announce that he has received documents and information specified in paragraph 2 of the given Article. Obligations of a legal person related to the convening of the general meeting of members of a legal person are fulfilled in respect of the person who has achieved a voting right.

Term for an agreement on the transfer of a voting right may not exceed a period of ten years.

Other non-property rights enjoyed by a member of a legal person may, too, be transferred by an agreement on the transfer of voting rights.

Article 2.90. Minutes

Meetings of a legal person’s collegiate body shall keep the minutes.

The minutes shall include the time and place of a meeting, number of participants, the fact of having a quorum, results of voting, and decisions. The minutes shall have to be annexed by the list of participants and information on the convening of the meeting. On the request of participants of the meeting information specified by them shall have to be included into the minutes. All alterations and supplements shall have to be deliberated.

Minutes shall have to be stored no less than ten years and on the request of each participant or other member of a managing body who participated or was entitled to participate in the meeting a copy of the minutes shall have to be issued. A legal person shall have the right to demand from a member of a legal persona a fee, not exceeding the costs of its issuance, for the copy of minutes.

Where a decision is signed by all members of a managing body of a legal person or where only one person constitutes a body of an legal person and in this case a decision made by that member of a legal person equals a decision made by a managing body of a legal person, minutes shall not be taken.

Laws may provide for different or supplementary requirements for minutes compared to those, which are laid down in paragraph 2 of the given Article.

Article 2.91. Keeping and Signing of Minutes

Minutes shall be taken by a secretary of a meeting, a chairman of a meeting, where a secretary is not elected, or by a chairman of a collegiate managing body of a legal person where a chairman and secretary of a meeting are not elected.

Minutes are signed by the person who has taken it and by the chairman of a meeting and in cases where he is not elected – chairman of a collegiate managing body of a legal person.

Minutes shall be taken and signed within a time limit established in incorporation documents or laws and in all cases, however, must not exceed thirty days as of the day on which a meeting was convened.

Article 2.92. Remarks on the Minutes

Participants of a meeting shall enjoy the right to make remarks on the minutes within three days as of the moment they have read them but neither the period of three days nor the maximum time limit for taking minutes established in incorporation documents may be exceeded.

Remarks on the minutes shall be attached to the minutes together with the information whether persons who signed the minutes agree or disagree with them.

Failure to make remarks shall not preclude the right to contest decisions of the managing body of a legal person.

Article 2.93. Voting

Resolutions of collegiate bodies of a legal person shall be adopted by voting.

Equality of votes shall mean that the same number of votes “for” and the same number of votes “against” have been received. In cases of equality of votes, vote of the chairman of a collegiate body shall be decisive. Where the chairman of a collegiate body has not been designated or fails to participate in the resolution adopting process, the resolution, in the case of equality of votes, shall be deemed not adopted.

Where members of a collegiate body fail to raise objections voting could be done, in writing, in the form of an interview.

In urgent cases the court may designate members of a body of a legal person.

Member of a body of a legal person may vote himself or may authorise other persons to vote for him as his proxy except as otherwise provided in incorporation documents of a legal person.

Decision of a chairman of the sitting (meeting) of a legal person’s collegiate body on the results of voting shall be decisive except in the cases where the voting is held in writing or a commission for counting of votes is established. In such cases the decision of the commission shall be final. Where upon the announcement of the results of voting by the chairman of the sitting or the commission for counting of votes, doubts are expressed on the lawfulness of voting, repeated voting, upon the request by the majority of members of a collegiate body, must be done.

Laws and incorporation documents of a legal person may provide for a different procedure of voting.

Provisions of the given Article shall not be applied to the general meeting of shareholders.

Article 2.94. Verification of a Decision

Where, for purposes of validity of a resolution, approval of the body of other legal person may be requested, the said approval may be effected at a later date within a reasonable period of time.

CHAPTER VIII

TERMINATION AND RESTRUCTURING OF LEGAL PERSONS

Article 2.95. Termination of Legal Persons

Legal persons shall be terminated by way of liquidation or reorganisation.

Reorganisation shall be termination of a legal person without the liquidation procedure.

A legal person shall be terminated as of the day of its removal from the Register of legal persons.

Article 2.96. Reorganisation of Legal Persons

Resolution to reorganise a legal person shall be passed by members of a legal person or the court in cases provided by law.

Resolution to reorganise, by way of merger, a legal person, which is joined by other legal person, may, too, be passed by the managing body of a legal person where the given circumstances emerge.

1) Public announcement about the terms of reorganisation of legal persons laid down in paragraph 2 of Article 2.99 of the given Code shall be made no later than thirty days prior to the general meeting of members of a legal person, which is going to be merged.

2) Every member of a legal person shall have the right to acquaint himself with the documents specified in paragraph 4 of the given Article.

3) One or some members of a legal person with no less than 1/20 of votes at the general meeting of members of a legal person shall enjoy the right to request the convening of the general meeting of legal person’s members on the reorganisation, by way of merger, of a legal person.

Resolution to reorganise a legal person shall be passed by the qualified majority vote. It shall be set in the incorporation documents and may be no less than 2/3 of the votes given by the persons present at the general meeting. Subject to paragraph 1 of Article 2.101 of the given Code, resolution to reorganise a legal person may be passed only upon the expiry of a thirty days period following the public announcement that terms for the reorganisation have been set. Terms of reorganisation shall have to be approved by a resolution to reorganise a legal person and documents of incorporation shall have to be altered or new documents shall have to be drawn up.

Members of a legal person shall have the right to acquaint themselves with the terms of reorganisation, incorporation documents of legal persons who will continue the activities after the reorganisation or documents of newly incorporated legal persons or with their projects and reports drawn up by all managing bodies of legal persons participating in the reorganisation, assessments of experts as well as financial statement for the last three financial years. Where terms of the reorganisation were set six months following the end of the financial year of at least one legal person participating in the reorganisation, interim financial statement has to be issued in accordance with the same rules applied to the earlier financial statement and has to be presented to the members of a legal person. It shall be issued no earlier than three months prior to the setting of terms for the reorganisation. All members of a legal person shall have the right to receive copies of the said documents.

Managing bodies of legal persons shall have to notify members of legal persons about all essential changes after terms of reorganisation have been set and prior to taking decision on the reorganisation and attach this written notification to documents specified in paragraph 4 of the given Article as well as inform, orally, about essential changes in the general meeting of members of legal persons.

Article 2.97. Modes of Reorganisation of Legal Persons

Legal persons may be reorganised by way of merger and division.

Joining and consolidation shall be the possible modes of merger of a legal person.

Joining shall be merger of one or more legal persons to the other legal person, which become successors to all rights and obligations of the reorganised legal person.

Consolidation is a merger of two or more legal persons into a new legal person, which becomes a successor to all rights and obligations of reorganised legal persons.

Possible modes of splitting up of legal persons shall be division and parcelling out.

Parcelling out shall be parcelling out of legal person’s rights and obligations to other functioning legal persons.

Division shall be incorporation of two or more legal persons on the basis of the legal person under reorganisation, which become successors to certain parts of legal person’s rights and obligations.

Where the resolution to liquidate a legal person was not passed by the general meeting of the members of a legal person or where at least one member of a legal person became a successor to a part of property of a legal person under liquidation it shall be prohibited to reorganise such legal person under liquidation.

Specific character of reorganisation of individual legal persons may be prescribed by the laws, which regulate individual legal forms of legal persons.

Article 2.98. Reorganisation of Legal Persons of Different Legal Forms

Only legal persons of the same legal form may participate in the reorganisation procedures with the exception of derogations provided by laws regulating individual legal forms of legal persons.

Upon termination of a reorganised legal person whose members are liable for obligations of a legal person, members of the terminated and reorganised legal person shall, irrespective of the terms of reorganisation, accept subsidiary liability for the obligations of the dissolved legal person, which emerge prior to the legal person’s, who will continue activities of the dissolved legal person, becoming a successor to the rights and obligations of the terminated legal person. Where a member of a legal person fails to become a member of a legal person who, upon reorganisation, will continue the activities of the dissolved legal person throughout the reorganisation procedure as well as later, he shall not be exempted from the liability specified in the given paragraph.

Article 2.99. Terms of Reorganisation and Report on the Reorganisation

Managing bodies of legal persons participating in the reorganisation shall have to prepare the terms of reorganisation which have to indicate:

1) information, specified in Article 2.44. of the given Code, on all legal persons participating in the reorganisation;

3) procedure for becoming a member of a legal person who continues activities after reorganisation, terms and time limit as well as payments to the members of a legal person;

4) moment from which a legal person continuing the activities becomes a successor to rights and obligations of a terminated legal person;

5) ancillary rights conferred to managing and other bodies of a legal person, employees of administration or experts specified in Article 2.100 if the given Code.

Public announcement of the terms of reorganisation shall be made subject to the provisions of paragraph 1 of Article 2.101 of the given Code and filed with the Register of legal persons no later than on the first day of publication by applying the provisions of paragraph 3 of Article 2.66 of the given Code mutatis mutandis.

Managing bodies of each legal person participating in the reorganisation shall have to draw up written reports, which have to indicate the goals of reorganisation, explain the terms of reorganisation, continuity of legal person’s activities, time limit for reorganisation and economic grounds.

Paragraph 3 of the given Article shall be applied only in those cases where a joint-stock company, participating in the reorganisation, or other persons whose members have no less than 1/20 of all votes request it.

Article 2.100. Assessment of the Terms of Reorganisation

Terms of the reorganisation of a legal person shall be assessed by an independent expert who has the necessary qualifications.

Independent experts shall be designated by each legal person participating in the reorganisation. Where there is a wish to designate a single expert for all legal persons under reorganisation such designation must be approved by the registrar of legal persons

Article 2.101. Protection of the Rights of Creditors of the Legal Persons under Reorganisation

Public announcement of the terms of reorganisation shall be made three times with at least three-month intervals between the announcements or public announcement shall be made once and all creditors of a legal person shall be given a written notice thereof. The notice shall indicate data specified in points 1, 2 and 4 of paragraph 1 of Article 2.99 of the given Code as well as information where and when documents listed in paragraph 4 of Article 2.96 are available.

A creditor of a legal person under reorganisation shall enjoy the right to request termination of the contract or performance of obligations before the expiry of the time limit as well as redress of damages, where this has been provided in the contract, and where there are grounds to presume that the performance of obligations may become more difficult due to reorganisation and where, on creditor’s request, a legal person failed to extend an additional guarantee for the performance of obligations.

Creditors of the person under reorganisation shall have the right to acquaint themselves with the documents specified in paragraph 4 of Article 2.96 of the given Code and receive their copies.

Article 2.102. Invalidity of Reorganisation

Only the court may declare reorganisation invalid and only in cases where the following circumstances emerge:

1) no public announcement of the respective documents of the reorganisation procedure has been made or they were not filed with the Register of legal persons;

2) resolutions on the reorganisation passed by the body of members of a legal person or other managing body are declared invalid;

3) not all requirements for reorganisation established by the imperative provisions of law have been fulfilled.

Where the period following the termination of a legal person to its applying to the court exceeds six months reorganisation may not be declared invalid.

Where applicable, the court must grant a reasonable time limit to correct mistakes which gave grounds for declaring reorganisation invalid.

Judgement of the court to declare reorganisation of a legal person invalid shall not invalidate the activities of a legal person after reorganisation or of a newly incorporated legal person prior to the alteration of respective data in the Register of legal persons. All legal persons who participated in the reorganisation shall accept solidary liability for obligations arising from such contracts of legal persons.

Article 2.103. Simplified Reorganisation of Legal Persons

Where a legal person under reorganisation is joined to a legal person which is the only member of the legal person under reorganisation or where public legal persons participate in the reorganisation, paragraph 3 of Article 2.99 and Article 2.100 of the given Code shall not be applied.

Article 2.104. Restructuring of Legal Persons

Restructuring shall be an alteration of the juridical form of a legal person whereby a legal person of a new juridical form becomes the successor to all rights and liabilities duties of the restructured legal person.

Where a legal person, members of which are liable for obligations of a legal person, is restructured, members of a restructured legal person, irrespective of a new legal form of a legal person, shall accept subsidiary liability, for three years, for the obligations of the restructured legal person which emerge prior to the registration of a legal person of a new legal form with the Register of legal persons. Where a member of a restructured legal person fails to become a member of a legal person of as new juridical legal form he will not be exempted liability specified in the given paragraph either during restructuring or later.

Public legal person, except public and municipality enterprises, may not be restructured into a private legal person.

Laws regulating individual legal forms of legal persons may establish a specific mode for the restructuring of legal persons.

Article 2.105. Mandatory Restructuring of Legal Persons

Laws may provide for circumstances under which a legal person must alter its legal form.

Where within the time limit established by the law, which may not be shorter than nine months, members of a legal person fail to pass a resolution on the alteration of legal person’s legal form, it shall be considered that the legal form of a legal person has been altered and the legal person acts according to the documents of incorporation inasmuch as they do not infringe laws regulating activities of legal persons having the legal form into which the said legal person had to be altered.

Where a legal person passes a resolution to liquidate a legal person within the time limit for the restructuring established by the law, paragraph 2 of the given Article shall not be applied.

Article 2.106. Grounds for Liquidation of a Legal Person

Grounds for the liquidation of a legal person may only be the following:

1) resolution of members of a legal person to terminate the activities of a legal person has been passed;

2) the court or the creditor’s meeting has passed a decision to liquidate a bankrupt legal person;

3) the court has passed a judgement to liquidate a legal person subject to the provisions of Article 2.131 of the given Code;

4) the court has passed a judgement to liquidate a legal person in cases prescribed by Article 2.70 of the given Code;

5) the term of the legal person has expired;

6) the number of members of a legal person has decreased more than the permitted the minimum prescribed by law where member of a legal person fails to pass a decision within six months following the decrease, to reorganise or restructure a legal person;

7) incorporation of a legal person has been declared invalid subject to the provisions of Article 2.114 of the given Code.

Article 2.107. Resolution of Members of a Legal Person on Liquidation

1) Resolution to liquidate a legal person shall be passed by a qualified majority vote of members of a legal person. It shall be established in incorporation documents of a legal person and it may not be lower than 2/3 of all votes of the participants of the general meeting.

2) Resolution to liquidate a legal person may not be reversed where at least one member of a legal person received part of the property of a legal person under liquidation.

Article 2.108. Appointment of a Liquidator

1) After the resolution to liquidate a legal person has been passed, members of legal persons, general meeting of creditors, registrar of legal persons or the court must appoint a liquidator.

2) Incorporation documents of a legal person or laws may provide for different rules for the appointment of a liquidator or establish a concrete liquidator. These rules shall not be binding on the court, general meeting of creditors or the registrar of legal persons.

3) A liquidator shall be a person having the necessary qualifications. Some liquidators may be appointed. Where some liquidators are appointed liquidation commission shall be formed and one of the liquidators shall be appointed a chairman of the liquidation commission.

4) Where the grounds for liquidation are points 5 and 6 of Article 2.106 of the given Code and where a member of a legal person fails to appoint a liquidator, managing bodies of a legal person or members of a legal person with no less than 1/20 of all votes and registrar of legal persons shall have to apply to court requesting the appointment of a liquidator.

5) Where the grounds for liquidation are points 3 or 7 of Article 2.106 of the given Code, institution authorised by the Government shall discharge the duties of a liquidator before a liquidator has been appointed by a member of a legal person.. This institution, on the approval of the court, shall have the right to assign other person to discharge the duties of a liquidator.

Article 2.109. Revocation of a Liquidator of a Legal Person

1) Liquidator of a legal person may be revoked by a simple majority of vote of legal person’s members present at the meeting.

2) Members of a legal person with no less than 1/10 of all votes, a creditor with no less than fifty thousand Litas right of requisition or no less than 1/5 of the legal person’s employees shall have the right to apply to court to change the liquidator where he fails to act in a proper manner, is dishonest in effecting settlements with creditors and members of a legal person, is dishonest in discharging other duties or infringes the rights of legal person’s members, creditors or legal person’s employees.

Article 2.110. Authority of a Liquidator

1) Managing bodies of a legal person shall be divested of their authority and the authority of legal person’s members shall be delegated to a liquidator as of the day of his appointment while in cases specified in paragraph 5 of Article 2.108 of the given Code – as of the moment when the resolution on the liquidation of a legal person enters into force.

2) A liquidator shall enjoy the rights of a legal person’s managing body and provisions of Chapter VII of the given book shall be applied to him mutatis mutandis.

Article 2.111. Contracts of a Legal Person in Liquidation

Legal person in liquidation may conclude only such contracts, which are related to the termination of legal person’s activities as well as those contracts, which are provided for in the liquidation resolution.

Article 2.112. Notification about Liquidation

1) The person, which passed a resolution to liquidate a legal person in accordance with the procedure established in the regulations of legal persons, shall make a public announcement thereof three times with at least 3-month interval between the announcements or make a public announcement once and shall give all creditors written notices thereof. The notices shall include all data listed in paragraph 1 of Article 2.42 of the given Code.

2) Register of legal persons shall, too, be notified about the liquidation no later than on the first day of the public announcement thereof in accordance with the procedure established in paragraph 3 of Article 2.66 of the given Code.

3) A different procedure for the notification about the liquidation may be established by the given Code or other laws of the Republic of Lithuania.

Article 2.113. Sequence of and Procedure for the Satisfaction of Claims of a Legal Person’s Creditors

In the event of legal person’s liquidation the following sequence of and procedure for the satisfaction of creditors’ claims shall be established:

1) priority in satisfying creditors’ claims shall be given to claims secured by the mortgage of property of a legal person in liquidation – from the value of the mortgaged property;

2) first in sequence for the satisfaction of claims shall be employees’ claims connected with labour relations; claims of compensation for maiming or other physical injuries, occupational disease or deprivation of life resulting from an accident in the place of work as well as claims of natural persons to settle accounts for agricultural produce supplied for processing.

3) second in sequence for the satisfaction of claims shall be the claims related to taxes and other payments to the budget as well as compulsory state social insurance and health insurance contributions and foreign loans granted the State guarantee;

4) third in sequence for the satisfaction of claims shall be all other claims of creditors.

The claims of creditors of each successive sequence shall be fulfilled upon fully satisfying the claims of creditors of the preceding sequence. If assets are insufficient to fulfil all the claims of one sequence in full, said claims shall be satisfied in proportion to the amount of claims due to each creditor.

Article 2.114. Unlawful Incorporation of a Legal Person

Unlawful incorporation of a legal person may be recognised only by the court and only in cases where:

1) all incorporators were incapable or the provision establishing the minimum number of incorporators has been violated;

2) documents of incorporation prescribed by law have not been drawn up or mandatory provisions of the regulations for the incorporation of a legal person have been violated;

3) true goals of legal person’s incorporation were unlawful or contradict public order;

4) minimum authorised capital has not been formed in accordance with the procedure established by law and within the established time limit;

5) documents of a legal person fail to provide for its business name, goals, amounts of authorised capital and personal contributions of the members of a legal person where such requirements are provided in the mandatory provisions of laws regulating individual juridical forms of legal persons.

Where the court passes a judgement that the incorporation of a legal person was unlawful the said legal person must be liquidated in accordance with the procedure established by law.

Where applicable, the court must grant a reasonable period of time to correct mistakes due to which the incorporation of a legal person was recognised to be unlawful.

Passing a judgement that a legal person has been incorporated unlawfully the court shall have to take into consideration the interests of employees and members of a legal person who participated in the incorporation of a legal person.

The claim for the recognition of unlawful incorporation of a legal person may be filed by a member or managing bodies of a legal person as well as by a public prosecutor to protect public interests.

Members of a legal person listed in Article 2.116 of the given Code shall have the right to file an application to the court with the request that shares (interest, contributions) of a legal person which are in possession of a legal person’s member whose actions contradict the goals of legal person’s activities and where there are no grounds to expect any changes in the said actions, be sold to the applying member of a legal person.

The claim for the forced sale of shares (interest, contributions) shall be filed with the district court according to the location of the registered office of a legal person. The court must inform the legal person, whose shares (interest, contributions) have to be sold in the forced manner, about the claim and the decisions.

Participation of a lawyer in the process of litigation of the parties to the given cases shall be compulsory.

Member of a legal person who has filed a claim for forced sale must apply to other members of a legal person to become co-claimants.

The following members of a private legal person shall have the right to file an application for forced sale of shares (interest, contributions):

1) one or some shareholders of a private company whose face value of shares accounts for no less than 1/3 of the authorised capital;

2) one or some members of a partnership whose interest accounts for no less than 1/3 of all interest of jointly owned assets;

3) one or some members of an agricultural partnership or co-operative society whose contribution accounts for no less than 1/3 of all contributions.

A member of a legal person shall have no right to file an application for the forced sale of shares (interest, contributions) under the circumstances laid down in Article 2.115 if incorporation documents of a legal person or contracts concluded by its members provide for different rules of forced sale of shares (interest, contributions) and the said rules may be applied.

Member of a legal person shall have no right to file an application for forced sale of shares (interest, contributions) if he is controlled by a legal person the shares whereof (interest, contributions) have to be sold in a forced manner.

Member of a legal person shall have no right to file an application for forced sale of shares (interest, contributions) if he himself is the legal person the shares whereof (interest, contributions) have to be sold in a forced manner

Article 2.117. Restrictions on the Transfer of Title to Shares (Interest, Contributions)

A defendant shall have no right, without claimant’s consent, to sell or otherwise transfer the title to shares (interest, contributions), to mortgage them or otherwise encumber the rights to them as well as transfer or otherwise encumber the rights granted by the shares (interest, contributions) as of the day on which the court judgement becomes res judicata, except as otherwise decided by the court. The court shall enjoy the right to authorise the acts specified in the given paragraph if a defendant fails to give his consent thereof.

A defendant shall have no right to sell, except according to the provisions of the given section, or otherwise transfer the title to shares (interest, contributions), to mortgage them or otherwise encumber the rights to them, as well as transfer or otherwise encumber the rights granted by the shares (interest, contributions) as of the day on which the court judgement becomes res judicata, except as otherwise decided by the court.

The court may, upon plaintiff’s request, prohibit a defendant to exercise his right to vote without the consent of the court or a plaintiff.

Prohibitions established in paragraphs 1 and 3 of the given Article shall be valid irrespective of the appeal against the court judgement.

Article 2.118. Appointment of Experts

Upon satisfaction of a claim the court shall have to appoint experts to set the price of shares (interest, contributions).

Experts shall start their activities only after the court judgement becomes res judicata . Experts shall have to present a written report on the price of shares (interest, contributions) to the court and the parties to the case.

Articles 2.127 – 2.130 of the given Code shall be applied mutatis mutandis.

Article 2.119. Setting of a Price

After the experts’ report on the price of shares (interest, contributions) has been submitted, the court shall have to pass a judgement on the setting of a price and establish the person who will have to reimburse experts’ work and other expenses borne. The court may decide that a legal person shall have to reimburse the given expenses.

A separate appeal against the court judgement whereby a price is set may be lodged.

Article 2.120. Procedure for Forced Sale

After the court judgement on setting a price has become res judicata the defendant shall have, in two weeks time, to transfer title to his shares (interest, contributions) to the plaintiff and the plaintiff shall have the right to accept the shares (interest, contributions) and pay the established price. The price shall have to be paid upon the transfer of title to the shares to the plaintiff. Transfer shall take place in the registered office of a legal person whose shares (interest, contributions) are sold or in some other place agreed upon by the plaintiff and the defendant.

Where a defendant fails to discharge his duty to transfer the title to his shares (interest, contributions), a legal person shall have to transfer the title to the shares (interest, contributions) in the defendant’s name and issue documents confirming the owner’s rights to the shares (interest, contributions) sold in the forced manner and declare respective defendant’s documents invalid as well as make a public announcement thereof in the source prescribed by the legal acts. Upon the receipt of documents confirming the title to the shares (interest, contributions), the plaintiff shall pay the price into the deposit account of a notary, bank or other credit institution.

In the event that there are some plaintiffs, shares (interest, contributions) sold in forced manner shall be allotted as proportionally as possible to the legal person’s shares (interest, contributions) held by the plaintiffs.

Article 2.121. The Procedure for Forced Selling of Shares in the Presence of a Prior Right

Where other members or persons of a legal person have a prior right to acquire the shares (interest, contributions) sold in forced manner, a legal person, upon the receipt of a res judicata court order on the setting of a price, must make a proposal to the said persons to purchase shares (interest, contributions) for the price fixed by the court. After the court judgement on the forced sale of shares (interest, contributions) has become res judicata , the defendant shall have to notify a legal person about the persons who enjoy the prior right to acquire shares (interest, contributions) sold in forced manner in accordance with the contracts concluded by the plaintiff.

Upon the receipt of legal person’s proposal to exercise the prior right, the persons shall have, within thirty days, in writing, to accept or reject the proposal. Where a person fails to reply to the said proposal, the proposal shall be deemed unaccepted.

Upon the expiry of a thirty-day time limit, a legal person shall have to notify the plaintiff and the defendant of how many shares (interest, contributions) have been accepted. Upon the receipt of the said notification, the defendant shall have to transfer title to the shares to persons specified in the notification and the remainder of them, in accordance with the provisions of Article 2.120 of the given Code, to the plaintiff. Shareholders who purchase shares (interest, contributions) shall have to make payments for them in accordance with the provisions of Article 2.120 of the given Code. Where the persons enjoying the prior right fail to make timely payments for shares (interest, contributions), shares (interest, contributions) shall be transferred to the plaintiff.

Article 2.122. Transfer of the Right to Vote

Persons listed in Article 2.116 of the given Code shall enjoy the right to apply to the court with a request to reinstate the owner of shares (interest, contributions) in his right to vote in cases where the right to vote has been assigned to other person whose actions contradict the goals of a legal person and there no grounds to expect positive changes in the future.

The owner of shares (interest, contributions) shall be granted the right to vote as of the day on which the court judgement has become res judicata.

In this case paragraphs 2 and 3 of Article 2.115, Article 2.116, paragraph 3 of Article 2.117 of the given Code shall be applied mutatis mutandis.

Article 2.123. Forced Sale of Shares (Interest, Contributions) Due to the Failure to xercise the Rights Properly

Where members of a legal person listed in Article 2.116 fail to exercise their rights of members of a legal person properly due to the actions of the other member of a legal person and where there no grounds to expect any positive changes in the future, the said members may file an action to the court requesting the member of a legal person, whose actions obstruct proper exercise of their rights, to purchase their shares (interest, contributions). In this case paragraphs 2 and 3 of Article 2.115 and Articles 2.116 – 2.121 of the given Code shall be applied mutatis mutandis.

Member of a legal person who is requested to purchase plaintiff’s shares (interest, contributions) must apply to other members of a legal person with the proposal to become co-defendants.

CHAPTER X

INVESTIGATION OF LEGAL PERSON’S ACTIVITIES

Article 2.124. Content of the Investigation of Legal Person’s Activities

Persons listed in Article 2.125 of the given Code shall enjoy the right to request the court to appoint experts who have to investigate whether a legal person or legal person’s managing bodies or their members acted in a proper way, and in the event that improper actions are established to apply measures specified in Article 2.131 of the given Code.

Article 2.125. Persons Enjoying the Right to Apply for Investigation of the Activities

The following persons shall enjoy the right to apply for investigation of the activities:

1) one or some shareholders who hold or manage shares the par value of which accounts for no less than 1/10 of the authorised capital;

2) one or some members of an economic partnership whose interest accounts for no less than 1/10 of all interest;

3) one or some members of a farming partnership or a co-operative society (co-operative) whose contributions account for no less than 1/10 of all contributions;

4) members of a legal person who have no less than 1/5 of all votes, with the exception of legal persons’ members listed in Articles 2.35 and 2.37 and in points 1,2 and 3 of the given paragraph, who have no less than 1/5 of all votes;

5) persons as well as members of a legal person who, according to incorporation documents or contracts concluded with legal persons, have been granted said right.

The public prosecutor shall also have the right to apply for the investigation of legal person’s activities in an attempt to safeguard public interests including the cases where the activities of a legal person, its managing bodies or its members are at variance with the public interests.

Article 2.126. Filing of an Application

An application for the investigation of activities shall be filed with the district court according to the location of the legal person’s registered office.

An application may be filed only after a plaintiff has applied to a legal person (legal person’s managing body or its member) with the request to terminate inappropriate activities and has granted a reasonable time limit to adjust the situation. A request, which either fails to specify inappropriate activities or bad faith in discharging the duties or give reasons why the activities are considered to be inappropriate, shall not be deemed to be an application.

Participation of a lawyer shall be obligatory in drawing up an application for the investigation of activities. Where a public prosecutor, acting in the public interest, files an application, provisions of the given paragraph shall not be applied.

Upon the receipt of an application and listening to the reasoning of the parties the court shall pass a judgement on the investigation of legal person’s activities if there are grounds to presume the feasibility of circumstances specified in Article 2. 124, paragraphs 2 and 3 of Article 2.125, or shall reject the application.

Article 2.127. Appointment of Experts

The court may appoint as experts any independent persons, who have the necessary qualifications to investigate legal person’s activities and make a report, in writing, on inappropriate activities, as well as draw up guidelines for the application of measures specified in Article 2.131 of the given Code.

Prior to the appointment of experts the court must make a proposal to the parties to reach a consensus on the appointment of specific experts. Where a consensus has been reached, the court shall appoint jointly chosen experts if they meet the requirements set in paragraph 1 of the given Article. Where a consensus on the appointment of experts has not been reached, the court shall appoint experts, at its discretion, from the list, compiled by the parties, of proposed experts. Each party must compile a list of no less than ten experts and shall enjoy the right to delete, for any reasons, five experts from the list of the other party, as well as to give an opinion on the remaining five experts regarding their compliance with the requirements set in paragraph 1 of the given Article.

The number of experts shall be established by the court with due regard to the scope of investigation of legal person’s activities.

Article 2.128. Rights of Experts

Experts shall have the right to examine legal person’s documents and interrogate members of a legal person, members and employees of managing bodies as well as persons who were legal person’s members, members of managing bodies or employees in the period under investigation.

On experts’ instruction a legal person shall have to grant a possibility to examine legal person’s property. The judge may, without prior notification to the parties, pass a judgement, which shall grant the right to the experts to take the actions laid down in paragraph 1 of the given Article with respect to other legal persons as well as receive documents and information from respective public institutions.

Where experts are prevented from exercise of their rights the court may give instructions to the police to facilitate the experts’ activities.

Article 2.129. Payment for Experts’ Work

The experts, who were appointed by the court, must notify the court about the terms as well as the amount of payment for their services and reimbursement of expenses incurred on them. In the event that the court approves the terms as well as the amount of payment and reimbursement of expenses incurred, it shall fix the sum, which may not be less than seventy per cent of the amount indicated by the experts, without prior notification to the parties. The plaintiff must pay the said sum into the separate account of the court.

Where the plaintiff fails to pay the sum indicated by the court into the separate account of the court, the court shall not proceed with the application. In such cases other parties to the case shall have the right to the reimbursement of court expenses incurred on them.

In the event that the court fails to approve the terms of payment and reimbursement of expenses proposed by experts it shall appoint new experts after listening to the opinions of the parties.

Article 2.130. Experts’ Reports and Dissemination of Guidelines

Upon the receipt of experts’ report and guidelines the court must notify the parties and their representatives thereof and send the copies of experts’ report and guidelines to each party and their representatives as well as convene a court sitting to discuss the said report and the guidelines.

Experts’ report and the guidelines must be sent to respective public institutions, which exercise the supervision, prescribed by the law, of legal person’s activities.

Persons, who were not specified in the given Article, may examine the experts’ report and guidelines only after permission of the court has been granted.

Article 2.131. Measures Applied by the Court

In the event that the experts’ report points out that legal person’s (legal person’s managing bodies or their members) activities are inappropriate and the court approves the said conclusion, the court may, upon receipt of opinions of the parties and public institutions mentioned in Article 2.130 of the given Code, apply one of the following measures:

1) revoke the decisions taken by the legal person’s managing bodies;

2) suspend temporarily the powers of the members of legal person’s managing bodies or exclude a person from legal person’s managing body;

5) to oblige making of amendments to certain provisions of incorporation documents;

6) to transfer the legal person’s right to vote to other person;

7) to oblige a legal person to take or not to take certain actions;

8) to liquidate a legal person and appoint a liquidator.

Upon the appointment of a member of managing body the court may fix his salary.

A decision to liquidate a legal person may not be taken where such decision would contravene the interests of other legal person’s members or employees or public interest. A decision to revoke decisions of legal person’s managing bodies may not be taken where the period of limitation of actions prescribed by the given Code or other laws has expired.

The court shall have to notify, without delay, the Register of legal persons about the judgement and its becoming res judicata.

PART III

AGENCY

CHAPTER XI

GENERAL PROVISIONS

Article 2.132. Conclusion of Contracts by Agents

Persons shall enjoy the right to conclude contracts through agents with the exception of those contracts which, due to their character, may be concluded only personally as well as other contracts prescribed by the law.

Agency shall be possible on the basis of contract, law statute, court judgement or an administrative act.

Legally capable natural persons as well as legal persons shall act as agents.

Persons who act in their own name although in the interest of other person shall not be deemed to be agents (sales intermediaries, etc.).

Article 2.133. Legal Effects of a Contract Concluded by an Agent

the event that a contract was concluded without due authorisation, a person who has concluded the contract shall be liable for his contractual obligations to the other party to the contract, except in cases, where the said party to the contract was aware or had to be aware of the fact that the latter was not entitled to conclude the contract.

A contract concluded by one person (agent) in other person’s (principal’s) name by disclosing thereby the fact of agency and without exceeding the rights conferred, shall assign, alter and destruct directly the civil rights and obligations of a principal.

Rights of an agent may also arise from the circumstances under which an agent acts (salesperson in retail trade, cashier, etc.). In the event that behaviour of a person gives reasonable grounds for the third persons to think that he has appointed the other person to be his agent , contracts concluded by the said person in principal’s name shall be binding for the principal.

In the event that concluding a contract an agent fails to inform that he acts in principal’s name and in his interests, the principal shall acquire the rights and assume the duties arising from the contract only where the other party to the contract was in a position to understand from the circumstances of conclusion thereof that the said contract was concluded with an agent, or where the identity of the person with whom the contract was concluded was of no importance to the said party.

Where the validity of a contract concluded by an agent is questioned due to a mistake, deceit, duress or threat, the existence or non-existence of the said circumstances shall be established with due regard to agent’s will.

Where a contract has been concluded as per principal’s instructions the principal may not question its validity by stating that concluding the contract the agent ignored certain circumstances if the principal was aware of the said circumstances or ignored them due to his carelessness.

Where a contract has been concluded by a person, who has not been authorised to do so, the principal must bear the consequences thereof only when the principal approves the said contract. The other party to the contract may, in this case, request to approve or not to approve the contract within its established time limit, which may not be shorter than fourteen days. Where no reply has been received within the established time limit the contract shall be deemed not approved. The approval of a contract shall have a retroactive effect, i.e. it shall be deemed valid as of the day of its conclusion.

The other party to the contract, which concluded a contract with a person, who was not authorised to do so, may terminate the contract prior to the approval of the contract by the principal, except in cases, where at the moment of its conclusion the said party was aware or had to be aware of the fact that it has concluded a contract with a person who has not been granted the requisite authority.

In Where an agent acted in excess of his powers but in the manner which gave to a third person serious grounds to think that he was concluding a contract with a duly authorised agent, the contract shall be obligatory to the principal, except in cases where the other party to the contract was aware or had to be aware that an agent was exceeding his powers.

An agent may not conclude contracts in principal’s name either with himself or with a person, whom he represents at the given time, as well as his spouse, parents, children or other close relatives. Such contracts, upon principal’s request, may be deemed null and void.

Restrictions laid down in paragraph 1 of the given Article shall not be imposed in the cases where other laws provide otherwise and where an agent acts as a statutory agent .

An agent may not conclude a contract which a principal himself is not authorised to conclude.

Article 2.135. Conflict of Interests

Where, in violation of the rights conferred, an agent enters into a contract, which contravenes the interests of a principal, such contract, upon principal’s request, may be deemed void in the cases where a third person was aware or had to be aware of the conflict of interests.

A person may not act as an agent of both parties to the contract. This provision, however, shall not be applied in the cases where contractual obligations are performed as well as in the cases where both parties to the contract express their will explicitly that the agent has to act in the interests of both parties.

Article 2.136. Legal Effects of a Contract Concluded in Other Person’s Name Without Express Authorisation or in Excess of Authority

A contract, which was concluded by a person in other person’s name without express authorisation or in excess of his authority, shall impose, alter and revoke obligations and rights of a principal only in the cases where, at a later date, the principal approves all the contract or that part of it, which is in excess of his authority (paragraph 6 of Article 2.133 of the given Code).

Principal’s approval of a contract at a later date shall make the contract valid as of the date of its conclusion.

Upon conclusion of a contract, which is not approved by the principal , under circumstances laid down in paragraph 1 of the given Article, an agent shall have to redress the damage incurred on a third person in the cases where the said third person was not aware and was under no obligation to be aware of the said circumstances.

Article 2.137. Power of Attorney

Power of attorney shall be a written document granted by a person (principal) to other person (authorised agent) to represent a principal in establishing and maintaining relations with the third persons.

An authorised agent whose rights in the power of attorney are not clearly defined shall enjoy the right to perform only those actions, which are necessary for the protection of principal’s property and property interests as well as supervision of principal’s property.

Article 2.138. Verification of the Power of Attorney by a Notary

The following powers of attorney must be verified by a notary:

1) power of attorney to conclude contracts whereby a notarial form is obligatory;

2) power of attorney to perform, in natural person’s name, the actions related to legal persons, with the exception of the cases where the authorisation of a different form is permitted;

3) power of attorney to administer, use or dispose of his immovable property granted by a natural person.

Powers of attorney verified by a notary shall be equalled to:

1) powers of attorney of servicemen verified by the commanders (heads)of military units, formations, military institutions and military schools;

2) powers of attorney of people in imprisonment institutions verified by the heads of imprisonment institutions;

3) powers of attorney of long voyage seamen on the ships, navigating under the colours of Lithuania, verified by the captains of the said ships.

Article 2.139. Simplified Verification of Power of Attorney

Power of Attorney, which is granted by a natural person to receive mail (specifically – posted money and parcels) as well as to receive salaries and other payments related to labour relations, pensions, benefits, stipends, may be verified by an organisation, in which a natural person works or studies, chairman of a partnership of multi-storey dwelling houses, in which a person resides, or a captain of a long voyage sea-fearing ship.

Article 2.140. Power of Attorney Granted by a Legal Person

1) Power of attorney granted by a legal person shall be signed and, in the event that the legal person must have a stamp, be stamped by the head thereof.

2) Additional requirements for a power of attorney granted by a legal person may be prescribed by the law.

3) Provisions of Articles 2.176-2.185 of the given Code shall be applied to the power of attorney granted by profit-seeking (commercial) legal persons.

Article 2.141. Rights and Obligations of a Legal Person Vested with the Power of Attorney

A legal person may be vested with the power of attorney to conclude only such contracts the right of conclusion whereof has been provided in his incorporation documents.

Article 2.142. Term of the Power of Attorney

1) The term of the power of attorney may be fixed or open-ended. Where the term of the power of attorney fails to be indicated, the power of attorney shall be valid for one year as of the day on which it was granted..

2) The power of attorney, verified by a notary, to perform certain actions abroad, which fails to specify its term, shall be valid until the person who granted the power of attorney revokes it.

3) Power of attorney, which fails to indicate the date when it was granted, shall be deemed invalid.

Article 2.143. The Right to Request Power of Attorney and its Copy

1) The third person who concludes a contract with a principal shall have the right to request an agent to produce his power of attorney and its copy.

Article 2.144. Obligation to Return the Power of Attorney

Upon the expiry of the term of the power of attorney or revocation thereof prior to the expiry of the term, an agent shall have to return the power of attorney to a principal or successors to his rights.

Article 2.145. Re-authorisation

An authorised agent shall have to perform the acts, which he has been authorised to perform. He may re-authorise the other person to perform the said acts only in the cases where such right has been conferred upon him by the authority he was vested with or where under certain circumstances he is forced to do so to protect the principal’s interests. A re-authorised person shall enjoy the same rights and assume the same obligations as an agent in respect of a principal and the third persons.

The form of power of attorney, which is given by re-authorisation shall have to conform to the form of the power of attorney, which has been granted.

The term of power of attorney granted by re-authorisation may not exceed the term of power of attorney, which formed the basis for granting it.

A person, who delegates his authority to the other person, shall have to notify a principal thereof and supply the necessary data about the person who was delegated the authority. Where the authorised agent fails to discharge the given obligation he shall be liable for the actions of the person, to whom he delegated his authority, as for his own actions. Where an authorised agent has been appointed as per principal’s instructions, an agent shall not be liable for the authorised agent’s actions, except in the cases where the agent was aware of the fact that the person who was appointed as authorised agent was dishonest and unreliable but failed to notify the principal thereof.

Article 2.146. The Right to Revoke Power of Attorney and Re-authorisation and the Right to Waive Them

A principle shall enjoy the right to divest, at any time, of the power of attorney whereas an authorised agent – to waive it. Both a principal and an authorised agent may, at any time, revoke re-authorisation. The person who has been vested with the power of attorney by way of re-authorisation may, in his turn, waive it.

Laws or an agreement of the parties may provide for the cases whereby an irrevocable power of attorney may be granted.

Article 2.147. Expiry of the Power of Attorney

Power of attorney expires:

1) upon the expiry of the term of power of attorney;

2) upon the divestment of power of attorney by a principal;

3) upon the waiver of power of attorney by an authorised agent;

4) upon termination of a legal person, which was vested with power of attorney

5) upon termination of a legal person which was vested with power of attorney or where the said person was instituted a bankruptcy;

6) upon the death, recognition of legal incapacity, partial capacity or absence of a natural person who vested with power of attorney;

7) upon the death, recognition of legal incapacity, partial capacity or absence of a natural person who was vested with the power of attorney.

Upon the expiry of power of attorney, power of re-authorisation, too, shall be terminated.

Expiry of representation may not be used against third persons acting in good faith, except in cases where the said persons were aware or had to be aware of the expiry of representation but were not aware of it due to their negligence.

Article 2.148. Obligation of an Authorised Agent to Notify About the Expiry of the Power of Attorney

A principle shall have to notify an authorised agent and the third persons known to the principle and for the establishment and maintenance of relations with whom the power of attorney has been granted, about the divestment of power of attorney, laid down in point 2 of paragraph 1 of Article 2.147. Where the power of attorney expires on the basis of provisions laid down in points 4 and 6 of paragraph 1 of Article 2.147 of the given Code, successors to the rights of the authorised agent shall have the same obligations.

Rights and obligations of an authorised agent and successors to his rights, arising as a result of the authorised agent’s actions prior to the date on which the said agent learned or had to learn about the expiry of the power of attorney, shall be valid for the third persons. In the event that the third person was aware or had to be aware of the expiry of the power of attorney, the given provision shall not be applied.

Upon the expiry of the power of attorney an authorised person and successors to his rights shall have to return the power of attorney to the principal or successors to his rights.

Article 2.149. Subsidiary Application of Provisions Regulating Agency

Provisions, which regulate agency, shall, too, be applied in the cases where a person whose business was managed by the other person without due authority approves the actions of the said person at a later date.

Article 2.150. Obligation of an Agent to Report

An Agent must present a report to a principal about his activities and give an account of everything he received in his mission to the principal.

Article 2.151. Obligation of a Principal to Refund the Expenses and Offer Remuneration

A principal shall have to refund all agent’s expenses related to his mission except as otherwise provided by the law or the contract.

A principal shall have to offer remuneration to the agent with the exception of the cases where the law or the contract provide for a free of charge representation.

CHAPTER XII

COMMERCIAL AGENCY

SECTION ONE

COMMERCIAL AGENT

Article 2.152. Concept of a Commercial Agent

A commercial agent shall be an independent person whose basic business activity is to act as intermediary for a principal in conclusion of contracts or conclusion of contracts in his or principal’s name and at the latter’s expense as well as in his interests.

A principal and an agent may, in a mutual contract, establish such competition restricting conditions, which are not prohibited by the provisions of the law on competition.

The contract may provide for an exemption, which grants a commercial agent an exclusive right to conclude contracts in principal’s name on a certain territory or with a certain group of consumers where such exemption fails to violate the provisions of paragraph 2 of the given Article.

Article 2.153. Prerequisites for the Activities of a Commercial Agent

Prior to commencing his activities a commercial agent shall have to insure his civil liability against possible damage which, as a result of his activities, may be incurred on the principal or the third persons.

Commercial agent’s rights and obligations may be established in writing or orally.

Upon a commercial agent’s or a principal’s request their contract must be concluded in writing. Waiver of the right to conclude the contract in writing shall be null and void.

Only upon conclusion of a contract in writing shall the following conditions be valid and shall establish:

1) restrictions on the civil liability of an agent or a principal or a complete exemption from civil liability ;

2) prohibition of competition after the contract has been terminated;

3) conditions for the termination of a contract;

4) exclusive rights of a commercial agent;

5) ratio of the commercial agent’s right to remuneration to the performance of a contract.

Article 2.155. Term of Validity of a Contract

A contract between a commercial agent and a principal may be for a fixed period or for an indefinite period.

Where a contract has been concluded for a fixed period and where upon the expiry of the given period the parties continue to exercise their rights and discharge their duties, the contract shall be considered renewed for an indefinite period on the same conditions.

Article 2.156. Obligations of a Commercial Agent

A commercial agent must:

1) carry out in good faith and carefully comply with all principal’s reasonable instructions, be loyal to the principal and act exclusively in the principal’s interest;

2) notify the principal, on a regular basis, about contracts, which are being or have been concluded, as well as supply other important information related to his own and principal’s business;

3) keep principal’s commercial secrets during the term of validity of a contract and upon its expiry;

4) where such condition has been set in the contract, avoid competition with the principal;

5) compensate the losses damages incurred on the principal ;

6) upon the expiry of a contract, return to the principal all documents, property and other things which were handed over by the principal.

Article 2.157. Obligations of a Principal

2) notify the commercial agent , without delay, about his consent or refusal to enter into a specific contract or enforce perform it, as well as about alterations of or supplements to the conditions of the contract;

3) notify, without delay, the commercial agent about the approval or a refusal to approve a contract, which the commercial agent concluded without due authority;

4) pay a salary as provided in the contract;

5) supply the commercial agent with information requested for the performance of the agency contract and especially notify about the existence of a lesser number of trade contracts than the commercial agent might expect.

Article 2.158. Remuneration to a Commercial Agent

A principal shall remunerate a commercial agent for every successfully concluded contract as provided in the agency contract. The commercial agent shall also have the right to remuneration in the case where the contract has been concluded by the principal himself but owing to the activities of the commercial agent and even in the event that the contract has been concluded after the expiry of agency relations.

A contract may provide that commercial agent’s remuneration shall depend on how successfully the principal’s instructions have been carried out or that the commercial agent is offered remuneration only in the cases where the third person has performed the contract. A commercial agent shall also be offered remuneration for the sums of money recovered for the principal from the third persons.

Where a commercial agent gives a guarantee to a principal that the other party to the contract will perform the contract in the proper way, the commercial agent shall be entitled to an additional remuneration (del credere). Agreement of the parties to preclude the given right shall be null and void. The right to additional remuneration (del credere) shall be achieved upon successful performance of a contract.

In the event that remuneration for a commercial agent fails to be set in the contract, he shall be offered the remuneration, which is paid to the commercial agents, employed in the sphere of the said commercial agent’s activities, and for the goods, which are provided in the agency contract, whereas in the absence of such practice the commercial agent shall be entitled to a reasonable remuneration set by taking into consideration all peculiarities of the contract.

Article 2.159. Setting of the Amount of Commercial Agent’s Remuneration

The amount of commercial agent’s remuneration set in the agency contract shall be presented in the form of a specific sum of money or the ratio of the contract value to the recovered sum.

All expenses borne by a commercial agent shall be refunded if the other party to the contract failed to reimburse them (transportation of goods, storage, protection, packaging expenses, customs duties paid, as well as other dues and fees) and they shall not be included into the expenses of commercial agent’s independent activities.

Where the salary of a commercial agent is presented in a concrete sum the Article 2.160 is applied inasmuch as it fails to contradict the essence of the agreement on the commercial agent’s salary expressed in concrete terms.

Article 2.160. The Procedure for the Remuneration to a Commercial Agent

A commercial agent acquires the right to remuneration as of the moment of the conclusion of a contract on condition that the principal has performed a contract or had to perform a contract according to an agreement reached with the third party , or the third party performed a contract, and in all cases, however, the latest date is when the third party has performed its part of the contract or could have done it if the principal had performed his part of the contract

Where a contract provides that remuneration for a commercial agent is paid only after a third person has performed a contract, a commercial agent shall be entitled to advance payment An advance payment may not be less than forty per cent of the salary and has to be paid no later than on the last day of the next month following the month on which a contract has been concluded, except as otherwise provided in the contract

Where it becomes evident that the third person will fail to perform a contract a commercial agent shall be denied the right to request remuneration. In the event that the money has already been paid or an advance payment has been made, aprincipal shall have the right to recover the money from the commercial agent. The given provision shall not be applied in the cases where the principal is at fault for the failure to enforce the contract.

A principal shall have to remunerate a commercial agent on a monthly basis and no later than on the last day of the month following the accounting period. The parties may, in a written contract, extend the term of payment but no longer than for three months.

Every month, and upon reaching a written agreement at least every three months, a principal shall have to submit to a commercial agent documents of accounting, the data of which shall allow to calculate and offer remuneration, as well as to inform about all circumstances against which payments to the commercial agent are stopped or cut.

In the event of disputes related to remuneration a commercial agent shall enjoy the right to request an audit to establish the exact amounts of remuneration and payments. Waiver of the right to audit shall not be valid. Where a principal refuses to carry out an audit or in the event of disagreement about the auditor the commercial agent shall have the right to file a request with the court for the mandatory appointment of an auditor.

Three-year period of limitation shall be applied to requests to recover a commercial agent’s remuneration.

Where a commercial agent has been granted an exclusive right to conclude contracts on a certain territory or with certain consumers, a commercial agent shall be entitled to payment by commission, which shall be calculated by taking into account the contracts concluded within the period of validity of the agency contract with the persons from the said territory or the said consumers.

A commercial agent shall, too, be entitled to payment by commission in the cases where the order of the third party has reached the principal prior to the expiry of the agency contract or within a reasonable period of time after the expiry of the agency contract and the contract is related to the agency contract.

Where a commercial agent is paid by commission after the expiry of the contract, the new agent shall not be entitled to payment by commission except in the cases where division of payment by commission under certain circumstances may be considered to be fair.

Article 2. 161. The right to Retention

A dealer commercial agent shall have the right to retain principal’s things , which are in his possession and the documents confirming the rights to them until the principal offers remuneration to the commercial agent .

Waiver of the right to retention shall be null and void..

Article 2.162. Rights of a Commercial Agent

A commercial agent shall enjoy the right to perform any requested actions to carry out principal’s instruction properly in the principal’s name without special authority . A commercial agent shall have the right to alter provisions of contracts and accept the performance of the contract only in the cases where the given right has been provided separately in the agency contract or a separate power of attorney.

Even though a commercial agent fails to be vested with authority to enter into contracts he shall be vested with authority to receive claims related to the quantity and the quality of goods as well as other claims related to the enforcement performance of a contract, and exercise, in the principal’s name, the latter’s right to secure the proof.

Article 2.163. Liability for Obligations Arising Under Contracts Concluded by a Commercial Agent

Where a commercial agent, in the principal’s name, concludes a contract without authority to do so and where the other party was not aware and was not able to be aware thereof, it shall be recognised that the principal has approved the contract in the case, where he, upon notification about the said contract by the commercial agent or the third person, failed to inform, without delay, the third person of his disapproval thereof.

Provision of paragraph 1 of the given Article shall also be applied in the cases where a commercial agent acted outside his authority.

Article 2.164. Prohibition of Competition

A commercial agent and a principal may provide in the contract that upon expiry of the contract the commercial agent shall not compete with the principal for no more than two years. The given provision may be agreed upon in writing.

Restriction of competition may be related only to a certain territory or certain kinds of goods and services or a group of customers and a territory, which were entrusted to the commercial agent.

A principal shall enjoy the right to waive, in writing, in a unilateral manner, the prohibition of competition until the end of a contract.

Where a contract provides for the prohibition of competition a commercial agent shall enjoy the right to compensation for all the period of the prohibition thereof. The amount of compensation shall be fixed by the agreement of both parties. The amount of compensation may be expressed by the sum of annual payment to the commercial agent.

Where the contract has been terminated through the commercial agent’s fault, the commercial agent shall be divested of the right to compensation provided in paragraph 4 of the given Article.

A principal shall be divested of the right to refer to the provision of the contract on the prohibition of competition where:

1) a principal terminates the contract without commercial agent’s consent violating thereby the term of prior notification about the termination of a contract and fails to notify, without delay, the commercial agent about the important reasons for the termination thereof.

2) A commercial agent terminates the contract for important reasons for which the principal is held liable and notifies the principal, without delay, thereof.

3) Contract of a commercial agent and a principal has been terminated by a court judgement for reasons for which the principal is held liable;

The court shall have authority, upon commercial agent’s request, to declare full or partial invalidity of the provision on the prohibition of competition where, taking into consideration the commercial agent’s lawful interests, the said provision causes him serious damage.

Agreements, which contravene the provisions of the given Article and aggravate the situation of the commercial agent, shall be null and void.

Article 2.165. Termination of a Contract Concluded for an Indefinite Period

An agency contract for indefinite period may be terminated on each party’s initiative subject to the condition that the other party has been notified about the termination thereof within the following term:

1) a month before – where the contract was valid for one year;

2) two months before – where the contract was valid for no more than two years;

3) three months before – where the contract was valid for no more than three years;

4) four months before – where the contract was valid for more than three years.

The parties may not establish a shorter term of notification by an agreement but may establish a longer term of notification but in all cases the same term of notification shall be established for both parties.

The party, which has terminated a contract without the other party’s consent and has violated the term of prior notification, must compensate the other party for the losses incurred by its actions, except in the cases, where the contract has been terminated for compelling reasons, which have to be notified, without delay, to the other party.

Except as otherwise agreed upon by the parties, the last day of notification and the day of the termination of a contract shall have to coincide with the end of the calendar month.

Where the term of an agency contract has expired and the fixed period contract became a contract for an indefinite period, the term of notification laid down in paragraph 1 of the given Article, which includes the time limit of validity of a fixed period contract, shall be applied to its termination.

Article 2.166. Termination of a Contract for a Fixed Period

Each party shall have the right to terminate a fixed period contract before the expiry of its term where there are compelling reasons to do so. Waiver of the given right shall be null and void.

Where the contract is terminated for reasons, for which the other party is liable, the latter shall have to compensate for the losses damages inflicted by the termination of the contract.

Article 2.167. Right to Compensation for the Damages

Where a contract has been terminated prior to the expiry of its term not through commercial agent’s fault he shall be entitled to compensation. Waiver of the right to compensation shall be null and void.

Besides, a commercial agent shall be entitled to compensation where:

1) upon the termination of the contract the principal has considerable profit from the business relations established by the commercial agent;

2) taking into consideration all circumstances, compensation would be in line with the principle of justice.

Maximum amount for compensation shall be the average annual payment to the commercial agent calculated for all the term of contract validity where the contract was valid for no more than five years.

Requirements for compensation shall be applied one year period of limitation counted as of the day following the termination of a contract.

A commercial agent shall be divested of the right to compensation where:

1) the contract has been terminated on the commercial agent’s initiative except in the cases where the commercial agent terminated a contract due to the unlawful actions of the principal or due to his illness, age or disability which prevent him from discharging his obligations properly.

2) the contract has been terminated on the principal’s initiative where the commercial agent was at fault.

3) A commercial agent, with principal’s consent transfers his rights and obligations stipulated in the agency contract to the other person.

A commercial agent shall be vested with authority to request compensation for damages, which he suffers upon the termination of the contract with a principal, and especially if he fails to receive a commission he is entitled to after a successful performance of an agency contract and a principal profits substantially from the commercial agent’s activities, where he fails to refund the expenses the commercial agent had to bear in the execution of the principal’s instructions.

Article 2.168. Exemptions

The laws may provide for exemptions to the provisions of the given Section where they are deemed necessary due to the specific character of commercial agent’s activities in the different fields of business.

SECTION TWO

PECULIARITIES OF COMMERCIAL AGENCY IN CONCLUSION AND PERFORMANCE OF INTERNATIONAL CONTRACTS OF PURCHASE AND SALE OF GOODS

Article 2.169. The Field of Application

Provisions of the given Section shall be applied only in the cases where the following requirements are fulfilled:

1) an international contract of purchase and sale of goods has been concluded and is performed;

2) a principal and the third person reside in different states.

Provisions of the given Section shall be applied only to the relations between a principal and a commercial agent, on the one hand, and the third person, on the other.

Provisions of the given Section shall not be applied:

1) to shares or other securities traded in the stock exchange;

2) to commodities sold by auction;

3) to the activities of statutory representatives as well as activities of representatives appointed by the decision of the court or an administrative institution.

Where a legal person’s managing bodies or employees act without overstepping the authority prescribed by law or legal person’s incorporation documents they, in the given Section, shall not be deemed to be agents.

Article 2.170. Rights and Obligations of an Agent

Rights and obligations of an agent may be express or implied in specific circumstances.

An agent shall be vested with authority to perform any acts, which under specific circumstances are necessary to carry out principal’s instruction properly.

Rights and obligations of an agent may be presented in any form and any mode of proof may be used to prove their content.

Article 2.171. Validity of Contracts Concluded by an Agent

Where an agent acts in principal’s name and in his interests without overstepping his authority and where the third person was aware or had to be aware that he was concluding the contract with an agent, the principal shall achieve the rights and assume obligations arising under the contract.

Rights and obligations arising under a contract concluded by the agent shall be imposed on a agent and not a principal where:

1) the third person failed to know and was not obliged to know that the contract was concluded with an agent (undisclosed agency );

2) specific circumstances (e.g. provision of the contract) confirm that the agent, not the principal, intended to achieve rights and assume obligations arising under the contract.

Where an agent fails to discharge his obligations to the principal, the principal, notwithstanding the circumstances laid down in paragraph 2 of the given Article, may exercise the rights, achieved by the agent, and related to the third person, by taking into consideration the right of the third person to use protective measures against the agent. Where the agent fails to discharge his obligations to the third person, the said person shall be vested with authority to exercise his rights, achieved against the agent, and related to the principal, by taking into account the right of the agent to use protective measures against the third person as well as the principal’s right to use protective measures against the agent.

Rights provided in paragraph 3 of the given Article may be exercised if the principal, the agent and the third person have been respectively notified thereof. Upon the receipt of the said notification, the third person or the principal may not waive the obligations linking them with the agent.

Where an agent fails to discharge his obligations to the third person through a principal’s fault, the agent must reveal principal’s name to the third person.

Where the third person fails to discharge his obligations to the agent, the agent must reveal the third person’s name to the principal.

A principal may not exercise the rights achieved by the agent and related to the third person, where the third person proves, that he would not have concluded the contract if he had known who the principal was.

Article 2.172. Conclusion and Enforcement of a Contract Without Due Authority or Outside One’s Authority

Where a person acts without due authority or outside his authority his actions shall have no legal consequences for the principal. In such cases rights and obligations of the said person and the third person shall be achieved.

Provisions of paragraph 1 of the given Article shall not be applied in cases where principal’s behaviour gave reasonable grounds for the third person to think that the agent had due authority and has not exceeded his powers.

Article 2.173. Approval of Agent’s Actions

A principal shall have the right to approve the actions taken by the person who was not authorised to do so or was outside his authority. Approval may be done in different ways. Besides, approval may be implied in principal’s behaviour. Approval enters into force as of the moment of its receipt by the third person. Approval, which entered into force, shall be irrevocable.

Where at the moment of entering into the contract the third person is unaware and is not able to know that the agent is not vested with authority or acts outside it, the third person shall not be liable to the principal if prior to the approval of his actions he notifies the principal, that the contract is not binding on him even after it has been approved.

Where on entering into a contract the third person knew or had to know that the agent was not vested with authority or acts outside it the third person may not terminate the contract prior to the approval of agent’s actions or thereafter.

The third person shall in all cases enjoy the right to waive only a partial approval of the agent’s actions.

Where a person performs certain actions in the future legal person’s interests prior to the incorporation of a legal person, such actions may be approved only in the cases prescribed by the law.

Where a person acts without due authority or outside his authority and where the principal refuses to approve his actions, the person must compensate to the third person those losses which would enable the third person to be in the situation in which he might have been if the agent had possessed the requested authority or acted without overstepping his authority.

A person shall not be liable to the third person where the third person knew or had to know, that the person was not vested with authority or acted outside it.

Article 2.175. Termination of Agent’s Authority

Authority of an agent shall be terminated:

1) upon the agreement between a principal and an agent ;

2) upon conclusion of the contract or performance of some other action for which the authority was granted;

3) where a principal divests the agent of the authority he was granted;

4) where an agent waives the rights he was granted;

5) in other cases provided for by the given Code.

Termination of agent’s authority shall not exercise influence on the authority of the third person except in the cases where the third person knew or had to know about the termination of agent’s authority or the circumstances, which formed the basis for the termination thereof.

Notwithstanding the termination of agent’s authority, an agent shall enjoy the right to perform, in principal’s or his successors’ interests, certain actions which are necessary to avoid damage, which may be incurred on his or his successors’ interests.

SECTION THREE

PROCURACY

Article 2.176. Concept of Procuracy

Procuracy shall be a power of attorney, which a legal person (entrepreneur) grants to his employee or other person to perform, in principal’s name and in his interests, all legal acts related to legal person’s (entrepreneur’s) undertaking.

Besides, procuracy shall grant the right to perform, in principal’s name and in his interests, legal acts in the court or other non-judicial institutions.

A person who is issued a procuracy shall be a procurator.

Article 2.177. Issuance of a Procuracy

Procuracy shall be issued by a respective managing body of a legal person or the owner of a legal person or his authorised person in accordance with the procedure established in incorporation documents.

Procuracy may be issued to some persons (joint procuracy). In such case all procurators shall have to act together.

Article 2.178. Form of a Procuracy

Procuracy shall be issued in writing and signed by a person vested with authority to issue a procuracy.

Procuracy shall be registered in accordance with the procedure prescribed by the law.

Article 2.179. Rights of a Procurator

A procurator shall not have the right to perform and he may not be authorised to perform the following acts:

1) to transfer an immovable object thing of the principal (enterprise) or encumber the rights to it;

2) to sign the balance sheet and tax return of the principal;

3) to institute bankruptcy proceedings of the principal;

4) to issue a procuracy;

5) to accept interest holders into an enterprise;

A procurator shall not have the right to delegate his authority to the other person.

Article 2.180. Restrictions on a Procuracy.

Procuracy may be restricted. Procuracy may be restricted to a branch office of a legal person, respective spheres and types of legal person’s activities, certain circumstances, time or territory.

Restrictions on procuracy shall have no effect on the third persons.

Article 2.181. Entering Into Force of a Procuracy

A procuracy establishing the relations between a principal and a procurator shall enter into force as of the moment of its issuance.

A procuracy, which is establishing relations between a procurator and the third persons shall enter into force as of the moment of its registration in accordance with the procedure prescribed by the law.

Article 2.182. Signature of a Procurator

Signing documents in a principal’s name a procurator shall have to indicate that he acts as a procurator, i.e. to include the word “procurator” or its abbreviation “pp”.

Article 2.183. Procurator’s Liability

A procurator shall be liable to a principal and the third persons in the same manner as a commercial agent.

Article 2.184. Termination of Procuracy

Procuracy shall be terminated when:

1) a principal revokes it;

2) a procurator waives it;

3) a principal has been instituted bankruptcy proceedings;

4) a legal person which issued the procuracy is liquidated or reorganised;

5) a procurator is dead.

Procuracy shall be terminated as of the date of a respective entry in a respective register with the exception of the cases laid down in points 4 and 5 of paragraph 1 of the given Article.

Article 2.185. Acts Performed Without Procuracy

A principal may instruct his employees to perform acts, which in a certain field of undertaking are usual and commonplace, without issuance of the procuracy. In such cases provisions of the given Code regulating a procuracy shall be applied by analogy.

It is presumed that employees working in a shop or a warehouse shall have the right to sell, deliver or receive goods as well as receive claims concerning the quantity and quality of goods.

On signing documents in the principal’s name employees specified in the given Article shall have to indicate their capacity, name, family name and authority.

BOOK THREE

FAMILY LAW

PART I

GENERAL PROVISIONS

CHAPTER I

FAMILY LAWS

Article 3.1. Relationships governed by Book Three of the Civil Code of the Republic of Lithuania

The provisions of Book Three of the Civil Code of the Republic of Lithuania define the general principles of the legal regulation of family relations and govern the grounds and procedures of entering into marriage, validity and dissolution of marriage, property and non-property personal rights of spouses, filiation, mutual rights and responsibilities between children, parents as well as other family members, the basic provisions on adoption, guardianship, curatorship and on the procedures of registering Acts of Civil Status.

The provisions of the other Books of the Civil Code, as well as the provisions of other civil laws, shall apply to family relationships to the extent that they are not regulated by the provisions of this Book.

Article 3.2. Sources of family law

Family relations shall be governed by the Constitution, the Civil Code and other laws of the Republic of Lithuania as well as by the international treaties of the Republic of Lithuania.

The Government and other public authorities of the Republic of Lithuania may adopt regulations on family law matters only in the cases and to the extent provided for in this Code and other legislation.

Customs shall apply to family relations only in cases provided for by legislation. In case there is a contradiction between the law and the custom, the law shall prevail.

Article 3.3. Principles of the legal regulation of family relationships

In the Republic of Lithuania the legal regulation of family relationships shall be based on the principles of monogamy, voluntary marriage, equality of spouses, priority of protecting and safeguarding the rights and interests of children, up-bringing of children in the family, comprehensive protection of motherhood and other principles of the legal regulation of civil relationships.

Family laws and their application must ensure the strengthening of the family and its significance in the society, the mutual responsibility of family members for the preservation of the family and the education of the children, the possibility for each member of the family to exercise his or her rights in an appropriate manner and to protect the children of minor age from the undue influence of the other members of the family or other persons or any other such factor.

Article 3.4. Analogy of statute or law

Where family relationships are not governed by this or the other Books of the Civil Code, they shall be governed by the provisions of other civil laws applicable to similar legal relations. The application by analogy of special legal norms stipulating derogation from the general provisions shall be prohibited.

Where it is not possible to apply statute by analogy and also where the resolution of the matter is left to judicial discretion, the rights and duties of the subjects of family relations shall be determined on the basis of justice, good faith, reasonableness and other general legal principles.

Where there are no mandatory rules, also in cases provided for in this Code and other laws, the subjects of family relations may determine their rights and duties by mutual agreement in accordance with the principles enshrined in paragraph 2 and Article 3.3 hereof.

Article 3.5. Implementation and protection of family rights

ersons are free to implement and exercise their family rights at their own discretion including the right to the protection of family rights. A waiver from a family right or its implementation shall not abolish the right except in cases provided for by law.

In exercising their family rights and performing their duties, persons must comply with the laws, respect the rules of their community life as well as the principles of good morality and act in good faith.

It is Pprohibited to abuse family rights, i. e. it is prohibited to exercise them in such a way and by such means as would violate or restrict other persons’ rights or interests protected by law, or would inflict harm on other persons. If a person abuses a family right, the court may refuse to protect it .

Family rights shall be protected by courts, institutions of guardianship and curatorship, governmental or non-governmental organisations in the ways provided for herein. Courts and other institutions shall seek that the parties to a dispute resolve their dispute peacefully by mutual agreement, and shall help the parties in every possible way to reach such an agreement.

Article 3.6Limitation period for action

Claims arising from legal family relations shall be subject to statutory limitations except for the exemptions provided for in this Book hereof.

The procedures for the calculation, suspension, termination or restoration of limitation periods shall be stipulated in the rules of Book One hereof unless this Book provides for different rules.

PART II

MARRIAGE

CHAPTER II

CREATION OF MARRIAGE

SECTION ONE

AGREEMENT TO MARRY AND ITS LEGAL CONSEQUENCES

Article 3.7. Concept of marriage

Marriage is a voluntary agreement between a man and a woman to create legal family relations executed in the procedure provided for by law.

A man and a woman who have registered their marriage in the procedure provided for in law shall be deemed to be spouses.

Article 3.8. Agreement to marry (engagement)

Agreement to marry is not binding and may not be enforced by force although it may give rise to legal consequences described in Articles 3.9 to 3.11 hereof.

An agreement to marry may be expressed orally or in writing.

An application to register a marriage submitted to the Register Office in the prescribed format shall be deemed to be a public agreement to marry.

Article 3.9. Return of gifts

If the engagement is terminated, both parties to the public agreement to marry shall have a right to demand that the other party return everything he or she has received from the other party as a gift in consideration of the intended marriage except where the value of the gift is under one thousand litas or where the party who had received a gift died before the registration of the marriage and the marriage has not been contracted due to the death of one of the parties.

Requests for the return of gifts shall be governed by the rules of Book Six hereof regulating relations pertaining to unjust enrichment or acquisition of assets not due.

An action for the return of a gift may be brought within a year of the date of the refusal to marry.

Article 3.10. Compensation of damages

The party to the agreement to marry that has refused to contract the marriage without a reasonable cause must compensate the damages incurred by the other party due to the refusal to marry.

The damages include the actual expenses of the party in preparation to marry and the actual expenses made in performing the obligations related to the intended marriage.

Where a party refuses to marry for a weighty reason that has emerged through the fault of the other party, the party at fault shall pay damages under paragraphs and 2 hereof.

The time limit to present claims for damages shall be one year after the date of the refusal to marry.

Article 3.11. Compensation for non-pecuniary damage

1. Where the parties had made a public agreement to marry, the party entitled to damages under Article 3.10 hereof, may also claim compensation for non-pecuniary damage.

2. An action for compensation of non-pecuniary damage may be brought within a year of the date of the refusal to marry.

SECTION TWO

CONDITIONS FOR CONTRACTING A MARRIAGE

Article 3.12. Prohibiting marriage of persons of the same gender

Marriage may be contracted only with a person of the opposite gender.

Article 3.13. Voluntary nature of marriage

Marriage shall be contracted by a man and a woman of their own free will.

Any threat, coercion, deceit or any other lack of free will shall provide the grounds on which the marriage declared null and void.

Article 3.14. Legal age of consent to marriage

Marriage may be contracted by persons who by or on the date of contracting a marriage have attained the age of 18.

At the request of a person who intends to marry before the age of 18, the court may, in a summary procedure, reduce for him or her the legal age of consent to marriage, but by no more than three years.

In the case of a pregnancy, the court may allow the person to marry before the age of 15.

While deciding on the reduction of a person’s legal age of consent to marriage, the court must hear the opinion of the minor person’s parents or guardians or curators and take into account his or her mental or psychological condition, financial situation and other important reasons why the person’s legal age of consent to marriage should be reduced. Pregnancy shall provide an important ground for the reduction of the person’s legal age of consent to marriage.

In the process of deciding on the reduction of the legal age of consent to marriage, the state institution for the protection of the child’s rights must present its opinion on the advisability of the reduction of the person’s legal age of consent to marriage and whether such a reduction is in the true interests of the person concerned.

Article 3.15. Active capacity

A person who has been declared by a res judicata court judgement) to be legally incapacitated may not contract a marriage.

If there is knowledge of a case pending before a court for the declaration of one of the parties to an intended marriage to be legally incapacitated, the registration of the marriage must be postponed until the judgement of the court becomes res judicata.

Article 3.16. Prohibition to violate the principle of monogamy

A married person who has not terminated his or her marital bond in accordance with the procedures laid down by the law may not enter into a second marriage.

Article 3.17. Prohibition to contract marriage between close relatives

Marriage between parents and children, adopters and adoptees grandparents and grandchildren, real or foster-brothers and real or foster-sisters, cousins, uncles and nieces, aunts and nephews shall be prohibited.

SECTION THREE

FORMATION OF MARRIAGE

Article 3.18. Application to register a marriage

Persons intending to marry must file an application to register the marriage in the procedure specified in Article 3.299 hereof.

Article 3.19. Making public the application to register a marriage

The fact of the submission of the application to register a marriage shall be made public in the procedure specified in Article 3.302 hereof.

Article 3.20. Confirmation of the compliance with the requirements for the formation of a marriage

While filing an application to register a marriage, the intended spouses must confirm in writing that they have met all the requirements laid down for the formation of marriage in Articles 3.12 to 3.17 hereof.

Before registering a marriage, the officials of the Register Office must check if all the requirements laid down in Articles 3.12 to 3.17 for the formation of marriage have been complied with.

Article 3.21. Premarital medical examination

At the time of filing an application to register a marriage, the officials of the Register Office shall suggest to the intended spouses that they undergo a premarital medical examination and prior to the date of the registration of their marriage submit a doctor’s certificate drawn up in the form specified by the institution authorised by the Government.

Failure to submit a doctor’s certificate shall not be an impediment for the registration of the marriage.

Failure of one of the parties to an intended marriage to inform the other party that he or she is suffering from a venereal disease or AIDS shall provide a cause for rendering the marriage null and void.

Article 3.22. Declaration on impediments to marriage

Any interested person shall have a right to make a written declaration to the Register Office that has made the application to register a marriage public to the effect that, subject to this Book, there are impediments to the marriage.

Having received a declaration on impediments to a marriage, the official of the Register Office shall postpone the registration of the marriage and request that the declarant submit written evidence of the facts alleged in the declaration within three days. If the declarant fails to submit such evidencewithin three days, the marriage shall be registered in accordance with the general procedures.

If the written evidence on the existing impediment to a marriage is presented , the official of the Register Office shall suspend the registration of the marriage and, in the event of a dispute, advise the intended spouses on their right to apply for the court to refute the declaration. In such a case the marriage shall be registered only after the intended spouses submit to the Register Office the res judicata court judgement on the refutation of the declaration on the impediments to the marriage as ill-founded.

Where the court decides to refute the declaration on the impediments to the marriage as unfounded , after the formation of the marriage the intended spouses shall have a right, within a year of the day on which the court’s judgement became res judicata, to claim damages from the person who submitted the declaration on impediments to the marriage, except in cases where the declaration was presented by the parents of one of the spouses or a public prosecutor.

Article 3.23. Proof of marriage

The Register Office that has registered a marriage shall issue a Certificate of Marriage.

The proof of marriage shall be the record of the marriage and the Certificate of Marriage issued on the basis of the record.

Article 3.24. Formation of religious marriages in the procedure established by the Church (confessions)

A religious marriage is formed in accordance with the procedures established by the internal law (canons) of the respective religion.

The formation of a marriage in accordance with the procedures established by the Church (confessions) shall entail the same legal consequences as those entailed by the formation of a marriage in the Register Office provided that:

1) the conditions laid down in Articles 3.12 to 3.17 hereof have been satisfied;

2) the marriage has been formed according to the procedures established by the canons of a religious organisation registered in and recognised by the Republic of Lithuania;

3) the formation of a marriage in the procedure established by the Church (confessions) has been recorded at the Register Office in the procedure provided for herein.

Article 3.25. Official records of marriages formed in the procedure established by the Church (confessions)

Marriages formed according to the procedure established by the Church (confessions) shall be entered in the official records in accordance with Article 3.304 hereof.

SECTION FOUR

LEGAL EFFECTS OF MARRIAGE

Article 3.26. Equality of spouses

Having contracted a marriage, the spouses acquire the rights and duties defined in this Book.

Spouses shall have equal rights and equal civil liability in respect of each other and their children in matters related to the formation, duration and termination of their marriage.

Spouses may not waive, by mutual agreement, their rights or extinguish their duties that arise from a marriage.

Article 3.27. The duty of spouses to support each other

Spouses must be loyal to and respect each other, they must support each other morally and financially and contribute toward the common needs of the family or the needs of the other spouse in proportion to their respective capabilities.

Where due to objective reasons one of the spouses is unable to make a sufficient contribution toward the common needs of the family, the other spouse must do that in accordance with his or her abilities.

Article 3.28. Creation of family relations

By contracting a marriage the spouses create family relations as a basis for their life together.

Article 3.29. Passive and active capacity of spouses

Marriage shall not restrict the passive and active capacity of spouses, nevertheless the possibility of the spouses to exercise certain rights may be restricted by the contract of marriage or the mandatory rules hereof.

Article 3.30. Duties of the spouses in respect to their children

Spouses must maintain and bring up their children of minor age, care for their education and health, ensure the child’s right to personal life, inviolability of his or her personality and freedom, the child’s property, social and other rights laid down in the domestic and international law.

Article 3.31. The surnames of the spouses

Both spouses shall have the right to retain their respective surnames or to choose the surname of the other spouse as their common surname or to have a double surname by adjoining the surname of the other spouse to one’s own surname.

Article 3.32. Representation

Any of the spouses may authorise the other to represent him and act on his behalf.

Where certain acts require the consent of the other spouse, but for any objective reason the other spouse is unable to give such a consent, the court may, upon the interested spouse’s request, give the interested spouse permission to perform the act. Before giving the permission, the court must satisfy itself that the consent of the other spouse is really unobtainable, while the permission will serve the interests of the family. The court’s permission is valid only for the act specified in the court’s order to be performed in the specified period of time. If the court finds that the spouse’s actions are contrary to the interests of the family or of the children of minor age, it may amend or revoke its permission on the request of the state institution for the protection of the child’s rights or the public prosecutor. The amendments or revocation of the permission shall be effective only from the date of the court’s order to that effect. On the day of its adoption, such an order of the court must be sent to the Chamber of Notaries Public or, if the permission is related to the disposition of immovable property, to the public register.

If a spouse has acted on behalf of the other spouse without his or her permission or the permission of the court, such acts and their consequences shall be subject to the rules of Book Six regulating the management of the other spouse’s affairs.

Article 3.33. Disputes of spouses relating to the performance of their duties or

exercise of their rights

Where the spouses are unable to agree as to the performance of their duties or the exercise of their rights, either of them shall have a right to apply to the court for the resolution of their dispute.

In its efforts to resolve the dispute the court shall take measures for the reconciliation of the spouses.

The court must decide on the dispute of the spouses by taking account of the interests of their children of minor age and the interests of the family as a whole.

Article 3.34. Temporary Restriction of the property rights of a spouse

Where one of the spouses is in serious breach of his or her marital duties provided for in this Book hereof and poses a threat to the property interests of the family by his or her acts, the other spouse shall have a right to apply to the court for an order prohibiting the other spouse from disposing of their community property without the consent of the other spouse. The prohibition may not be valid for more than two years.

Transactions entered into by a spouse without the consent of the other spouse, which should have been obtained, may be annulled under an action brought by the other spouse provided the third party involved in the transaction was in bad faith. An action may be brought within a year of the date on which the spouse acquired or should have acquired knowledge of the transaction.

Article 3.35. Rights and duties of the spouses in the household

Neither spouse may, without the consent of the other spouse, alienate, pledge or lease movable property used in the household or encumber the right to it in any other way.

The movable property serving for the use of the household shall include household utensils, furniture, except for works of art, collections or home libraries.

A spouse having neither consented to nor ratified such a transaction may apply to have it annulled except in cases where the transaction was by onerous title and the third party was in good faith.

Article 3.36. The rights and duties of spouses in respect of the dwelling considered to be Family Property

Where the spouses live in a rented dwelling under a lease agreement, the spouse in whose name the dwelling is rented may not, without a written consent of the other spouse, terminate the lease agreement before its term, sublease it or transfer the rights under the lease agreement. The spouse having neither consented nor ratified such an act may apply to have it annulled.

A spouse who is the sole owner of the family dwelling may not, without a written consent of the other spouse, alienate, pledge or lease this dwelling. The spouse having neither consented to nor ratified such an act may apply to have it annulled provided that the disputed premises have registered in the public register as a family asset.

The rules of paragraph 1 and 2 shall be applied also in cases of usufruct (i. e. the right of using and receiving the profits, products or fruits of property that belongs to another) and contract of use.

CHAPTER III

NULLITY OF MARRIAGE

Article 3.37. The grounds and procedures for declaring Marriage Null and Void

A marriage may be declared null and void if the conditions for the formation of a valid marriage set out in Articles 3.12 to 3.17 hereof have been violated as well as on the grounds provided for in paragraph 3 Article 3.21, Articles 3.39 and 3.40 hereof.

A marriage may be annulled only by the court.

A marriage that the court declares to be null and void shall be void ab initio.

Having pronounced a marriage null and void, the court must send a copy of its judgement to the Register Office where the marriage was registered within three business days of its effective date.

Article 3.38. Persons entitled to petition for a decree of nullity on the grounds of violation of the requirements for the formation of marriage.

A marriage formed in violation of the conditions set for the formation of marriage in Articles 3.16 and 3.17 hereof may be declared null and void on the petition of spouse who was ignorant of the impediments to the marriage, a public prosecutor or any other person whose rights and lawful interests were violated by the marriage.

A marriage formed in violation of the requirement set in Article 3.14 hereof may be declared null and void on the petition of a minor spouse, his or her parents, guardians or curators, public institutions for the protection of the child’s rights or a public prosecutor. After the minor spouse attains the age of 18, he or she shall be the only person who may petition for a decree of nullity.

A marriage formed in violation of the requirement set in Article 3.15 hereof may be declared null and void on the petition of the guardian of the spouse lacking capacity to marry, a public prosecutor or any other person whose rights and lawful interests have been violated by the marriage.

A marriage formed in violation of the requirement set in Article 3.13 hereof may be declared null and void on the petition of the spouse who had failed to express his or her free will at the time of the marriage or a public prosecutor. Where the who failed to express his free will is a minor, the nullity of the marriage may be sought by his or her parents, guardians, curators or a State institution for the protection of the child’s rights.

A judgement for the nullity of marriage on the grounds referred to in paragraph 3 Article 3.21 hereof may be sought by the party to the marriage who by the time of marriage had not been informed of the other party’s illness.

Article 3.39. Nullity of a fictitious (‘sham’) marriage

A marriage formed fictitiously without the true intention of creating a legal family relationship may be declared null and void on the petition of either spouse or a public prosecutor.

Article 3.40. Declaring a marriage null and void due to the lack of free will

A marriage may be declared null and void if a spouse can prove that at the time of marriage he or she was incapable of understanding the true meaning of his or her actions or of being in charge of them of being in charge of them.

Nullity of marriage may be sought by a spouse if he or she entered into the marriage under threat, duress or fraud.

A spouse who gave consent to the marriage in consequence of an essential mistake may seek the nullity of the marriage. The mistake is presumed to be essential if it is a mistake about the circumstances related to the other party the knowledge of which would have been a sufficient reason for the party not to enter into the marriage. The mistake is presumed to be essential if it is about:

1) the health condition or the sexual abnormality of a party which makes the usual family life impossible;

2) the grave crime committed by the other party.

Article 3.41. Bars to the nullity of marriage

The court may refuse to declare a marriage null and void if the circumstances which had constituted an impediment to the marriage hereunder disappeared during the proceedings of the case.

The court may refuse to declare a marriage contracted by a minor persons null and void if the nullity of the marriage were contrary to the interests of the minor children of the minor spouse or spouses.

A marriage may not be pronounced to be a fictitious marriage if prior to the petition for nullity the spouses had created family relations or had cohabited for over a year from the date of marriage or had given birth to or were expecting their own child.

A marriage may not be declared null and void after divorce, except where the marriage had been contracted in violation of the monogamy principle or within the prohibited degrees of relationship (Articles 3.16 and 3.13).

A marriage which was contracted without one of the spouses expressing his free will may not be pronounced null and void if, after the formation of the marriage or after the knowledge of the circumstances giving a sufficient ground for pronouncing it null and void, the spouses lived together for over a year or they have given birth to or are expecting their own baby.

Article 3.42. Statutes of limitation

A spouse who entered into a marriage under the age of 18 may petition for the nullity of the marriage within a year of the date of his or her attaining full age.

Petition for the nullity of a marriage contracted without a free and voluntary consent may be presented within a year of the date on which the circumstances constituting the grounds for pronouncing the marriage null and void disappeared or became known.

Petition for the nullity of a fictitious marriage may be presented within a year of the date on which the marriage was contracted. A public prosecutor may petition for the nullity of a marriage under Article 3.39 hereof within five years of the date on which the marriage was contracted.

Petition for the nullity of a marriage on other grounds shall be subject to no limitations.

Article 3.43. Separation of spouses and maintenance order

In an effort to protect the interests of one of the spouses, the court may, circumstances permitting, order the spouses to separate pending the proceedings on the nullity of their marriage.

In pronouncing a marriage null and void, the court must decide as to the maintenance of the children and the spouse in good faith as well as to make a residence order in respect of the children.

Article 3.44. Extinguishment of the right to petition

The right to petition for the nullity of a marriage may not be devolved by succession or any other way.

After the death of one of the parties to a marriage, a public prosecutor may no longer initiate proceedings for the nullity of the marriage.

Article 3.45. Legal effects of marriage declared null and void

Any children born of a marriage subsequently decreed void by the court shall be treated as born within marriage.

Where both the spouses were in good faith, i. e. did not and could not know about the impediments to their marriage, the legal consequences of their marriage, although it has been declared null and void, shall be the same as those of a valid marriage except for the right of succession. Evidence of the good faith of the spouses must be indicated in the judgement of the court.

Article 3.46. Legal consequences of nullity where one or both spouses were in bad faith

With a null and void marriage where only one of the parties was in good faith, the party in good faith shall be entitled to all the rights a spouse is entitled to by virtue of a valid marriage.

With a null and void marriage where both the parties were in bad faith, they lose all the rights and duties spouses have by virtue of a valid marriage. Each of them shall have a right to recover their own property including the gifts to the other party.

Article 3.47. Rights of the spouse in good faith

If in need of maintenance, the spouse in good faith shall have a right to petition for maintenance from the spouse in bad faith for a period not exceeding three years.

The amount of the maintenance shall be at the discretion of the court having regard to the financial position of both the parties. The court may make an order for periodical monthly payments or one payment of a lump sum. If the financial position of one of the parties changes, the interested party may start apply for the increase, decrease or termination of maintenance.

An order for maintenance to the spouse in good faith terminates on the remarriage of the payee or at the end of the three-year period during which maintenance was paid.

Where one or both spouses are of minor age or have been declared by the court lacking legal capacity, guardianship and care institutions or the public institution for the protection of the child’s rights must attend the proceedings for the nullity of the marriage of such persons and give their opinion on whether the nullity of the marriage may prejudice the rights and interests of such persons or their children.

CHAPTER IV

DISSOLUTION OF MARRIAGE

SECTION ONE

FUNDAMENTALS OF DISSOLUTION OF MARRIAGE

Article 3.49. Cases of dissolution of marriage

A marriage is dissolved by the death of one of the spouses or by termination by the operation of law.

A marriage may be dissolved by the mutual consent of the spouses, on the application of one of the spouses or through the fault of a spouse (spouses).

Article 3.50. Dissolution of marriage by the death of one of the spouses

A marriage is dissolved by the death or a court judgement of presumption of death of one of the spouses.

Where one of the spouses is presumed dead, the marriage shall be considered dissolved from the date on which the court judgement becomes res judicata or from date specified therein.

If the spouse who has been presumed to be dead by a court judgement turns up, the marriage may be renewed by the mutual application of the spouses to be presented, after the annulment of the court judgement of presumption of death, to the Register Office that registered the dissolution of marriage.

A marriage may not be renewed if the other spouse had remarried or there are impediments under Articles 3.12 to 3.17 hereof.

SECTION TWO

DIVORCE BY THE MUTUAL CONSENT OF THE SPOUSES

Article 3.51. Conditions for divorce

A marriage may be dissolved by the mutual consent of the spouses provided all the following conditions have been satisfied:

1) over a year has elapsed from the commencement of the marriage;

2) the spouses have made a contract in respect of the consequences of their divorce (property adjustment, maintenance payments for the children, etc.);

3) both the spouses have full active legal capacity.

In cases provided for in this Article divorce shall be obtained under simplified procedures.

Article 3.52. Application for divorce

A mutual application of the spouses for divorce shall be presented to the court of the district where one of the spouses resides.

The application must be accompanied by the contract as to the consequences of the divorce.

The application must contain reasons why, in the opinion of the spouses, their marriage has broken down.

Article 3.53. Divorce proceedings

The court grants a judgement of divorce if it is satisfied that the marriage has broken down irretrievably. A marriage shall be considered to have broken down irretrievably if the spouses no longer live together and it is not likely they will live together again.

An irretrievable breakdown of a marriage is presumed if the spouses have been separated form board and bed for over a year.

While granting a divorce decree, the court shall approve the contract of the spouses as to the consequences of divorce providing for the maintenance payments for the children of minor age and each other, the residence of their minor children, their participation in the education of their children and their other property rights and duties. The content of the contract shall be incorporated in the judgement of divorce. In case there is an essential change in the circumstances (illness of one of the former spouses, incapacity for work, etc.), the former spouses or one of them may petition the court to reconsider the terms and conditions of their contract as to the consequences of divorce.

Where the contract as to the consequences of divorce is not consistent with the public order or is an essential violation of the rights and lawful interests of the minor children of the spouses or of one of the spouses, the court shall not approve the contract and shall suspend the divorce proceedings until the spouses have made a new contract. If the spouses fail to comply with the directions of the court within six months of the suspension of the proceedings, the court shall not resume the consideration of the application for divorce.

Article 3.54. Reconciliation of spouses

The court must take measures to encourage the reconciliation of the spouses.

At the request of one of the spouses or on its own initiative the court may provide for an up to a six-month-long reconciliation period. At the end of the reconciliation period the divorce proceedings shall be resumed at the request of one of the parties.

If neither of the spouses petitions for divorce within a year of the beginning of the reconciliation period, the court does not resume the divorce proceedings.

Where the spouses have lived apart for over a year or the reconciliation period is essentially contrary to the interests of one of the spouses or those of their children, or where both the spouses require a substantive consideration of their case, the court shall not set any reconciliation period.

SECTION THREE

DIVORCE ON THE APPLICATION OF ONE OF THE SPOUSES

Article 3.55. Conditions for obtaining divorce

A marriage may be dissolved on the application of one of the spouses filed with the court of the district where the applicant resides, if at least one of the following conditions are satisfied;

1) the spouses have been separated for over a year;

2) after the formation of the marriage one of the spouses has been declared legally incapacitated by the court;

3) one of the spouses has been declared missing by the court;

4) one of the spouses has been serving a term of imprisonment for over a year for the commission of a non-premeditated crime.

On behalf of the spouse lacking legal capacity the application for divorce may be filed by his or her guardian, a public prosecutor or a guardianship and care institution.

Article 3.56. The content of the application

The application must contain the indication of one of the grounds for divorce under paragraph 1 Article 3.55 hereof.

The application must also indicate how the applicant is going to perform his or her obligations toward the other spouse and their minor children.

The application must also contain the data provided for in the Code of Civil Procedure.

Article 3.57. Examination of the application

A spouse’s application for divorce shall be examined in a simplified procedure.

Where divorce proceedings are commenced on the application of one of the spouses, the reconciliation measures referred to in Article 3.54 shall not be applied.

The court having regard to the age of one of the spouses, the duration of marriage, the interests of the minor children of the family may refuse to grant a divorce decree if the divorce may cause significant harm to the property and non-property interests of one of the spouses or their children.

The other spouse or his or her guardian shall have a right to declare that the marriage has broken down through the applicant’s fault and demand that the court grant divorce on the basis of the applicant’s fault. If the court considers the declaration to be well grounded , divorce shall be granted on the basis of the fault of the spouse who initiated the divorce proceedings (Article 3.60 hereof).

Where one of the spouses lacks legal capacity, a guardianship and care institution must present its opinion to the court concerning the guarantees of the interests of the spouse lacking legal capacity on divorce.

Article 3.59. Matters to be resolved by the court in granting divorce

In granting a divorce the court must resolve matters relating to the residence and maintenance of the minor children, the maintenance of one of the spouses, adjustment of the community property of the spouses, except in cases where the property has been adjusted by the mutual agreement of the spouses certified in the notarial procedure.

SECTION FOUR

DIVORCE ON THE BASIS OF THE FAULT OF ONE OR BOTH OF THE SPOUSES

Article 3.60. Conditions for obtaining divorce

A spouse may apply for divorce on the grounds provided for in this Section where the marriage has broken down through the fault of the other spouse.

The fault of a spouse for the breakdown of the marriage shall be established if he or she has seriously breached the duties under this Book hereof, which is the reason why their matrimonial life has become impossible.

A marriage shall be presumed to have broken down through the fault of the other spouse where he or she has been convicted of a pre-meditated crime or has committed adultery or is violent toward the other spouse or the other members of the family or has deserted the family and has not been caring for it for over a year.

Article 3.61. Both spouses at fault

The respondent in a divorce suit may argue against his or her fault and adduce facts to prove that the other spouse is at fault for the breakdown of the marriage.

The court having regard to the circumstances of the case may declare that both parties are at fault for the breakdown of the marriage.

A divorce based on the fault of both spouses shall have the same consequences as the dissolution of marriage by the mutual consent of the spouses (Articles 3.51 to 3.54).

Article 3.62. Divorce procedure

A divorce on the basis of the fault of one of the spouses shall be granted by the court under contentious procedure.

At the request of one of the spouses divorce proceedings shall be held in a closed hearing.

Article 3.63. Omission of the specific causes of a divorce from the court judgement

At the request of both spouses the court, in granting a divorce, shall omit the specific facts evidencing the fault of one or both the spouses for the dissolution of the marriage from the judgement and merely indicate that the marriage has broken down through the fault of one or both the spouses.

Article 3.64. Conciliation of spouses

The court must take measures to achieve a reconciliation of the spouses.

The court must suggest that the spouses reach an amicable settlement of their respective property interests, the maintenance and education of their children as well as other consequences of their divorce. If the spouses reach an agreement, paragraphs 3 and 4 of Article 3.53 hereof shall be applied.

The court shall apply measures provided for in paragraph 2 and 3 of Article 3.54 hereof, except in cases where the application of those provisions may be detrimental to the interests of the applicant or the minor children of the spouses.

Article 3.65. Provisional protection measures

The court having regard to the interests of the children of the spouses as well as the interests of one of the spouses may make orders for provisional protection measures pending the outcome of the divorce suit.

The court may make the following orders for provisional protection measures:

1) circumstances permitting, order one of the spouses to live separately;

2) determine the residence of the minor children with one of the parents;

3) demand for one of the spouses not to interfere with the use of certain property by the other spouse;

4) issue a maintenance order in favour of the minor children or the other spouse;

5) seize property until its ownership by one of the spouses is determined or in order to enforce maintenance payments;

6) seize the property of one of the spouses the value of which could be used to compensate for the litigation costs to the other spouse;

7) prohibit one of the spouses from having contact with his or her minor children or appearing in certain places.

SECTION FIVE

LEGAL EFFECTS OF DIVORCE

Article 3.66. The moment of the dissolution of marriage

A marriage shall be considered to be dissolved on the date when the divorce judgement becomes res judicata.

The court must send a copy of the divorce judgement to the local Register Office for the registration of the divorce within three business days of the date of res judicta of the judgement .

Article 3.67. Consequences of divorce to the property interests of the spouses

Legal consequences of divorce to the property interests of the spouses shall be produced from the moment of the commencement of divorce proceedings.

A spouse other than the one determined to be at fault for the breakdown of the marriage may ask the court to rule that the legal consequences of divorce to the interests of the spouses shall be produced from the day of their actual separation.

Article 3.68. Invalidation of transactions made after the commencement of the divorce proceedings

Transactions related to the joint property of the spouses made by one of the spouses after the commencement of the divorce proceedings may be invalidated by the court in an action brought by the other spouse provided the other spouse can prove that the transaction was made with the aim of prejudicing his or her interests while the third party was in bad faith.

Article 3.69. Surnames of the former spouses

On divorce, a spouse may retain his or her married surname or the surname he or she had before the marriage.

Where a marriage is dissolved on the basis of the fault of one of the spouses, the court may, at the request of the other spouse, prohibit the spouse at fault from retaining his or her married surname, except in cases where the spouses have children.

Article 3.70. Legal consequences of a divorce on the basis of the fault of one of the spouses

Where a divorce is granted on the basis of the fault of one of the spouses, the spouse at fault shall lose the rights of a divorcee under the law or under the marriage contract including the right to maintenance.

The other spouse may demand from the spouse responsible for the breakdown of the marriage damages related to the divorce as well as compensation for non-pecuniary damage done by the divorce. This provision shall not be applied where both spouses are responsible for the breakdown of the marriage.

At the request of the other spouse the spouse at fault for the breakdown of the marriage shall return the gifts received from him or her except for the wedding ring unless the marriage contract provides otherwise.

Where both spouses are responsible for the breakdown of the marriage, both of them shall have a right to demand the return of the immovable gifts given to each other unless more than ten years have elapsed from the gift contract and the immovable property has been transferred to third parties.

Article 3.71. Retention of the right to use the matrimonial dwelling

Where the matrimonial dwelling is owned by one of the spouses, the court may make a usufruct order and allow the other spouse to remain in the matrimonial dwelling if their minor children live with him or her.

The usufruct order shall be valid until the child (children) attain majority.

Where the matrimonial dwelling is rented, the court may award the rights of the lessee to the spouse that remains to live with their minor children or that lacks capacity for work and may evict the other spouse if he or she has been ordered to live separately.

Article 3.72. Mutual maintenance of the former spouses

The court when making a divorce judgement shall also make a maintenance order in favour of the spouse in need of maintenance unless the matters of maintenance are settled in the agreement of the spouses concerning the consequences of divorce. A spouse shall have no right to maintenance if his or her assets or income are sufficient to fully support him or her.

Maintenance shall be presumed to be necessary if he or she is bringing up a minor child of the marriage or is incapacitated for employment because of his or her age or state of health.

A spouse that was not able to obtain any qualifications for work (complete his or her studies) because of the marriage, common interests of the family or the need to care for the children, shall have a right to demand from the former spouse to cover the costs related to the completion of his or her studies or retraining.

The spouse responsible for the breakdown of the marriage shall have no right to maintenance.

While making a maintenance order and deciding on its amount, the court shall take into account the duration of the marriage, the need for maintenance, the assets owned by the former spouses, their state of health, age, capacity for employment, the possibility of the unemployed spouse of finding employment and other important circumstances.

The amount of maintenance shall be reduced, made temporary or refused if one of the following circumstances exist:

1) the marriage lasted for a period not exceeding a year;

2) the spouse entitled to maintenance has committed a crime against the other spouse or his or her next of kin;

3) the spouse entitled to maintenance has created his or her difficult financial situation through his or her own irresponsible acts;

4) the spouse requesting maintenance did not contribute to the growth of their community assets or wilfully prejudiced the interests of the other spouse or the family during the marriage.

The court may demand from the spouse obliged to provide maintenance to the other spouse to produce an adequate guarantee of fulfilment of this obligation.

The court may make maintenance orders for a lump sum or periodical (monthly) payments or property adjustment.

Where divorce is based on the application of one of the spouses because of the legal incompetence of the other spouse, the applicant spouse must cover the treatment and care expenses of the former incompetent spouse unless the expenses are covered from state social security funds.

The maintenance order shall be the basis for the forced pledge of the respondent’s assets. If the former spouse defaults on his or her obligation to pay maintenance, his or her assets may be used to make payments in the procedure laid down by the law.

Where the maintenance order is for periodical payments, a significant change in the circumstances referred to in paragraph 5 of this Article may warrant the application of either of the former spouses for an increase, reduction or termination of maintenance payments. Periodical payments shall be for the life of the creditor and shall be inflation-indexed annually in the procedure laid down by the Government.

After the death of the spouse obliged to pay maintenance, the obligation to pay maintenance is devolved on his or her successors to the extent of his or her estate irrespective of the way the estate is accepted.

Where the payee dies or remarries, the maintenance payment shall be terminated. On the payee’s death, the right to demand arrears of the maintenance payments shall pass to the payee’s successors. The dissolution of the new marriage shall create a right to apply for the renewal of maintenance payments provided the payee is bringing up a child by his or her former spouse or is caring for a disabled child by his or her former spouse. In all other cases the duty of the subsequent spouse to maintain the payee shall take precedence over that of the first former spouse.

CHAPTER V

SEPARATION

Article 3.73. Application for separation

One of the spouses may apply to the court for the approval of the separation if due to certain circumstances, which may not depend on the other spouse, their life together has become intolerable (impossible) or can seriously prejudice the interests of their minor children or the spouses are no longer interested in living together.

Both spouses may jointly apply to the court for the approval of their separation if they have made a contract concerning the consequences of their separation providing for the residence, maintenance and education of their minor children as well as for the adjustment of their property and mutual maintenance.

Article 3.74. Counter-applications

The defendant in a separation case shall have a right to lodge a counter-claim for divorce.

The defendant in a divorce case shall have a right to lodge a counter-claim for separation.

Where one of the spouses seeks a divorce while the other spouse applies for separation, the court may make a divorce order on the basis of the fault of one or both of the spouses or it may make a separation order.

Article 3.75. Separation procedure

The court shall examine applications for separation in the contentious procedure.

Having regard to the interests of the minor children of the spouses as well as to the interests of one of the spouses the court shall take measures to foster a reconciliation of the spouses (Article 3.54 hereof).

The court may order provisional protection measures referred to in Article 3.65 hereof.

Article 3.76. Matters to be resolved in making a separation judgement

When making a separation judgement, the court must designate the spouse with whom the children are to live, the maintenance of the children and the involvement of the separated father (mother) in the education of their children.

Having regard to important circumstances, the court may make an order for the residence of the children with other persons or in a guardianship or care institution.

In deciding which of the spouses should have a right to stay in their matrimonial dwelling, first consideration must be given to the spouse with whom the minor children are to live or to the spouse lacking capacity for work.

Where the spouses have made a contract as to the consequences of separation (paragraph 2 Article 3.73), the court shall approve the contract provided that it is consistent with public order, the rights and lawful interests of their minor children or one of the spouses. Having approved the contract , the court shall incorporate its content in the separation judgement.

If there is a serious change in the circumstances significant for the matters related to the separation of the spouses, either spouse may seek the reconsideration of the former judgement and a different resolution of matters referred to in paragraph 1 of this Article based on the change in the circumstances.

Article 3.77. Legal consequences of separation

When the court makes a separation judgement, it releases the spouses form the obligation to live together, but the other rights and duties of the spouses shall not be extinguished except in cases provided for herein.

Separation shall not produce any effects on the rights and duties of he spouses in respect of their minor children except in cases provided for herein.

When making a separation judgement, the court must always make a property adjustment order unless those matters are settled in the marriage contract of the spouses.

The legal consequences of separation for the property interests of the spouses shall be produced from the initiation of the separation suit. However, the spouse other than the one responsible, in the opinion of the court, for the separation may ask the court to make the legal consequences of separation retroactive to the date on which the spouses ceased to live together.

If one of the separated spouses dies, the survivor shall retain all the rights of a surviving spouse under the law, except where the surviving spouse has been declared by the court to be at fault for the separation. The same rule shall apply where the court makes a separation order on the basis of the joint application of the spouses unless the marriage contract of the spouses stipulates otherwise. The surviving spouse, however, shall lose the right of succession to the estate of the deceased spouse.

Article 3.78. Mutual maintenance of the spouses

When issuing a separation order, the court may order the spouse at fault for the separation to pay maintenance to the other spouse in need of it unless the maintenance matters are settled in the agreement of the spouses.

When making a maintenance order and determining the amount, the court must take into consideration the duration of the marriage, the need for maintenance, the financial position of both spouses, their state of health, age as well as their earning capacity, the unemployed spouse’s chances of finding employment and other important circumstances.

The court may rule that the spouse under the obligation to pay maintenance to other spouse must provide a security that the obligation will be fulfilled.

Maintenance may be ordered as a lump sum of a certain amount or periodical monthly payments or property transfer.

The maintenance order shall be the basis for the statutory pledge of the respondent’s assets. If a spouse defaults on his or her obligation to provide maintenance, his or her assets may be used to make payments in the procedure laid down by the law.

Where maintenance has been ordered in the form of periodical payments, a fundamental change in the circumstances referred to in paragraph 2 of this Article, either spouse may claim an increase, reduction or termination of the payments. Periodical payments shall be indexed annually in the procedure laid down by the Government.

Article 3.79. End of a separation

A separation shall end when the spouses start living together again and their life together proves their intention to live together permanently. A separation shall end when, on the joint application of the spouses, the court makes a judgement to end the separation, which revokes its former separation order.

On the resumption of their life together, the spouses shall remain separate as to property until they make a new marriage contract and set a new matrimonial regime.

The end of separation shall produce effects for third parties only if the spouses make a new marriage contract and register it in the procedure provided for in Article 3.103 hereof.

Where the spouses are separated for more than a year after the date when the court judgement became res judicata, either spouse may seek divorce on the basis provided for in point 1 paragraph 1 Article 3.55 hereof.

Article 3.80. Mandatory participation of the state institution for the protection of the child’s rights

Where the spouses have children of minor age, the state institution for the protection of the child’s rights must participate in the proceedings and present its conclusion on the possible violation of the children’s rights in taking decisions on separation matters.

PART III

RIGHTS AND DUTIES OF THE SPOUSES IN PROPERTY

CHAPTER VI

LEGAL REGIME OF PROPERTY OF SPOUSES

SECTION ONE

GENERAL PROVISIONS

Article 3.81. Kinds of legal regime of property of spouses

There shall be statutory and contractual legal regime of the property of spouses.

The statutory legal regime of the property of spouses shall be governed by Articles 3.87 to 3.100 hereof.

The contractual regime of the property of spouses shall be governed by Articles 3.101 to 3.108 hereof.

Article 3.82. Application of Statutory Legal Regime of Property

Where the spouses have not made a marriage contract, their property shall be subject to the statutory regime.

Article 3.83. The right of the spouses to fix their matrimonial regime in their marriage contract

When making a marriage contract, the spouses shall have a right to determine their matrimonial regime as they think fit.

Provisions of a marriage contract inconsistent with good morality or public order shall be null and void.

Article 3.84. Family assets

Any assets referred to in paragraph 2 of this Article owned by either spouse before or during the marriage shall be considered to be family assets. Family assets may be used only to meet the needs of the family.

The following assets owned by one or both spouses shall be family assets:

1) the family dwelling ;

2) movables intended for the use in the household including furniture.

Family assets shall include the right to use the family dwelling .

Assets referred to in paragraphs 2 and 3 of this Article shall acquire the legal status of family assets on the date of the registration of marriage, but the spouses may use this fact in respect of third parties in good faith only if an immovable is registered in the public register as a family asset.

Article 3.85. Legal regime of family assets

Assets referred to in paragraph 2 Article 3.84 hereof, which are the personal property of one of the spouses, may be used, managed or disposed of only in accordance with this Article.

The spouse who is the owner of an immovable considered to be a family asset, may transfer ownership rights to it, charge it or encumber the rights to it in any other way only with the written consent of the other spouse. Where the spouses have children of minor age, transactions in respect of an immovable considered to be a family asset require a judicial authorisation.

Family assets may not be used against a creditor if the creditor knew or should have known that the transaction is not related to meeting the needs of the family and is contrary to the interests of the family.

The legal regime of family assets or the composition of the family assets may not be changed by an agreement of the spouses.

Article 3.86. End of the legal regime of family assets

The legal regime of family assets shall end on divorce, declaration of the nullity of marriage or separation of the spouses.

The court may award the right to use family assets or a certain part of them (usufruct) to the spouse with whom the minor children of the marriage will live. The usufruct shall be valid until the children attain majority.

Where the spouses rent a family dwelling , the court may transfer the lessee rights to the spouse with whom the children will live or the spouse who lacks earning capacity.

The court may award the chattels intended for the use in the household to the spouse who stays in the family dwelling together with the minor children.

SECTION TWO

STATUTORY LEGAL REGIME OF PROPERTY OF SPOUSES

Article 3.87. Definition of the fundamentals of the legal regime of property

Under the legal regime the property acquired by the spouses after the commencement of their marriage shall be their joint community property.

The property of spouses constitute their joint community property until their separation as to property or until the extinguishment of the joint community property rights in some other way.

Article 3.88. Joint community property

Joint community property shall be:

1) property acquired after the formation of marriage in the name of one or both of the spouses;

2) the income and fruits collected from the individual property of a spouse;

3) income derived from the joint activities of the spouses, and income derived from the activities of one of the spouses except for the funds required for that spouse’s occupation;

4) an enterprise and the income derived from the operations of the enterprise or any other business provided that the spouses took up such business activities after the commencement of the marriage. Where the enterprise was owned by one of the spouses before the marriage, the joint community property shall include the income derived from the operations of the enterprise or any other business and the increase of the enterprise (business) after the formation of the marriage;

5) income from the work or intellectual activities, dividends, pensions, benefits or other payments collected by both spouses or one of them after the commencement of the marriage except for payments received for specific purposes (such as damages for moral or corporal injury, support, allowance or other benefits paid specifically to only one of the spouses, etc.).

All property shall be presumed to be joint community property unless it is established that it is the individual property of one of them.

Both spouses must be registered as the owners of the joint community property in the public register. Where the property is registered in the name of one of the spouses, it shall be considered to be joint community property provided it is registered as joint community property.

On divorce, a spouse shall have the right to claim one half of the funds accumulated in a private pension fund from the joint financial sources of the spouses.

Article 3.89. Individual property of the spouses

The individual property of each spouse shall consist of:

1) property acquired separately by each spouse before the commencement of the marriage;

2) property devolved to a spouse by succession or gift during the marriage unless the will or donation agreement indicates that the property is devolved as joint community property;

4) the rights to intellectual or industrial property except for the income derived from those rights;

5) funds and chattels required for the personal business of one of the spouses other than the funds and chattels used in the business conducted jointly by both spouses;

6) damages and compensation payments received by one of the spouses for non-pecuniary damage or personal injury, payments as financial aid for specific purposes and other benefits related specifically to only one of the spouses, rights that may not be transferred;

6) property acquired with the separate funds or proceeds from the sale of a separate property with the express intention of the spouse at the time of the acquisition to acquire it as a separate property.

The fact of property being a separate individual property of one of the spouses may be proved only by written documents (evidence) except in cases where the law allows to accept the testimony of witnesses or the nature of the property is sufficient proof of it being a separate property of one of the spouses.

Individual property that one of the spouses transfers to the temporary possession of the other spouse to meet the latter’s personal needs shall remain a separate property of the transferor.

Article 3.90. Declaration of individual property to be joint community property

The court may declare a individual property of one of the spouses to be joint community property if it is established that during the marriage the property was fundamentally improved with the joint funds of the spouses or with the funds of or due to the work of the other spouse (capital investments, reconstruction, etc.).

Where a spouse used both his or her separate funds and the funds owned jointly with the other spouse to acquire a property for his or her own personal needs, the court may declare the property so acquired to be joint community property provided the value of the joint community funds used to acquire such property exceeded the value of the separate funds of the spouse so expended.

Article 3.91. Enterprise (farm, business)

Property required for the operation of an enterprise (farm, business) established by one of the spouses after the formation of the marriage as well as the income of the enterprise (farm, business) established by one of the spouses before the formation of the marriage other than the funds required for the operation of the spouse’s personal enterprise (farm, business) shall be joint community property provided that property exists at the moment of divorce.

Article 3.92. Management, use and disposal of joint community property

Joint community property shall be used, managed and disposed of by the mutual agreement of the spouses.

The consent of the other spouse shall not be required for:

1) the acceptance or rejection of succession to estate;

2) the refusal to enter a contract;

3) urgent measures to protect the community property;

4) bringing an action to protect the joint community property;

5) bringing an action to protect one’s rights related to community property or one’s personal rights unrelated to the interests of the family.

When making transactions a spouse shall be presumed to have the consent of the other spouse except in cases where entering into a transaction requires the written consent of the other spouse. In exceptional cases where delay would cause serious damage to the interests of the family while the other spouse is unable to express his or her will because of illness or some other objective reasons, a spouse may enter into a transaction without the consent of the other spouse in accordance with the procedure laid down in Paragraph 2 Article 3.32 hereof.

Transactions related to the disposal or encumbrance of a jointly co-owned immovable or the rights to it, also transactions on the alienation of a jointly co-owned enterprise or securities or the encumbrance of the rights to them may be made only by both spouses except where one of the spouses has been given the power of attorney by the other spouse to enter into such a transaction.

Each spouse shall have a right to open a bank account in his or her name without the consent of the other spouse and to dispose freely of the funds on the account unless those funds have been made joint community property.

Where a transaction has been made without the consent of the other spouse, that other spouse may ratify the transaction within a month of the date when he or she learnt about the transaction. Before its ratification the other party may withdraw from the transaction. If the other spouse does not ratify the transaction within a month, the transaction shall be declared as having been made without the consent of the other spouse. If the other party to the transaction knew that the person with whom it was entering into the transaction was married, it can withdraw from the transaction only if the spouse misrepresented the existence of the other spouse’s consent.

Article 3.93. Consent to enter into a transaction

Where a spouse does not give the other spouse consent required to enter into a transaction, the interested spouse may seek leave to enter into the transaction in court.

The court shall award leave to enter into a transaction only if the interested spouse can prove that the transaction is necessary to meet the needs of the family or the needs of their jointly co-owned business.

Article 3.94. Power of attorney to manage property

A spouse may give a power of attorney to the other spouse to manage, use and dispose of their joint community property.

Where one of the spouses is away or cannot participate in the management of the community property for important reasons, the other spouse may apply to the court to be authorised to manage such property alone.

If the spouse is negligent or unreasonable in managing joint community property alone, he or she shall be liable for the losses sustained through his or her fault and shall compensate for them against his or her separate property.

Management of property shall be governed mutatis mutandis by the rules of Book Four hereof regulating the management of property owned by another person.

Article 3.95. Challenging the competence of managing joint community property

Where a spouse is unable to manage community property or does that in a way that incurs losses, the other spouse may apply to have the court remove the spouse from managing the property. The court shall grant the requested removal if the applicant can prove that it is necessary to ensure the needs of the family or those of their joint business.

Once the grounds for removal disappear, the removed spouse may request the court to allow him or her to manage the community property again.

Article 3.96. Avoidance of transactions

Transactions made without the consent of the other spouse and not ratified by him or her later, may be avoided in an action brought by that spouse within a year of the date when he or she learnt about the transaction provided it is proved that the other party to the transaction was in bad faith.

Transactions that should have been made with a written consent of the other spouse or could only have been made jointly by both the spouses (Paragraph 4 Article 3.92 hereof) may be declared void irrespective of the other party to the transaction being in good or bad faith except in cases where one or both of the spouses used fraud in making the transaction or made misrepresentations to institutions in charge of public registers or to any other institutions or officials. In such cases the transaction may be declared void only if the other party to the transaction was in bad faith.

Article 3.97. Management of the individual property of a spouse

A spouse shall use, manage or dispose of his or her individual property at his or her own discretion. Management, use or disposal of property defined herein as family assets shall be subject to the restrictions laid down in this Book.

Where a spouse manages his or her individual property in such a negligent or unreasonable way that it endangers the interests of the family because the property may be lost or substantially reduced, the other spouse shall have a right to seek in court the appointment of an administrator for the management of such property. The court may appoint the applicant to be the administrator.

After the circumstances which caused the appointment of an administrator disappear, either spouse may apply to the court to have the appointment of an administrator revoked.

A spouse may grant a power of attorney to the other spouse to manage his or her individual property. In such a case the mutual relations of the spouses in property shall be governed by the rules of Book Two hereof on the regulation of legal agency relations.

Where a spouse cannot manage alone his or her individual property and contribute to the needs of the household due an illness or any other objective reason, the other spouse shall have a right to use the individual funds and assets of the spouse incapable of managing alone his or her property for the needs of the household. The rule shall not be applied in cases where the spouses are separated or an administrator has been appointed for the individual property of the spouse unable to manage it alone and make a contribution towards meeting the needs of the household.

Article 3.98. Right to compensation

Where the value of the joint community property is increased by adding the individual property of one of the spouses, the spouse the addition of whose property has increased the value of the joint community property shall be entitled to compensation against the community property.

A spouse shall be entitled to compensation also in cases when his or her individual funds have been used for the acquisition of joint community property.

Each of the spouses must compensate for the reduction of the joint community property if he or she has used it for purposes unrelated to the duties referred to in Article 3.109 hereof, except in cases where he or she can prove that the property has been used to satisfy the needs of the family.

The compensations referred to in this Article shall be paid when the spouse’s joint co-ownership ends.

Article 3.99. Gifts of the spouses

Spouses shall have a right to make gifts of assets to each other in accordance with the rules of Book Six hereof, regulating gift agreements.

An agreement on a gift of an immovable shall give rise to legal consequences for the creditors of the donor only if the agreement has been recorded in a public register.

The beneficiary spouse shall be liable to the creditors of the donor for the obligations of the donor that existed at the time the gift agreement was made to the extent of the value of the gift. Where the gift is lost through no fault of the beneficiary, his or her liability for the obligations of the donor shall be extinguished.

Article 3.100. Grounds for termination of joint co-ownership of the spouses

Joint co-ownership rights of the spouses shall end on:

1) the death of one of the spouses;

2) presumption of the death of one of the spouses or the judicial declaration of one of the spouses as missing;

3) the declaration of the nullity of the marriage;

4) divorce;

5) separation;

6) the judicial partitioning of the community property;

7) the change of the legal regime of property in accordance with the mutual agreement of the spouses;

8) in other cases laid down by the law.

SECTION THREE

CONTRACTUAL LEGAL REGIME OF PROPERTY OF SPOUSES

Article 3.101. Marriage contract

A marriage contract shall mean an agreement of the spouses defining their property rights and duties during the marriage as well as on divorce or separation.

Article 3.102. Making a marriage contract

A marriage contract may be made before the registration of the marriage (pre-nuptial contract) or at any time after the registration of the marriage (post-nuptial contract ).

A marriage contract made before the registration of the marriage shall come into effect on the day of the registration of the marriage. A post-nuptial contract shall come into force on the date on which it is made unless the agreement stipulates otherwise.

A minor may enter into a marriage settlement only after the registration of the marriage.

A spouse declared by the court as having limited active capacity may enter into a marriage contract only with a written consent of his or her custodian . If the custodian refuses to give consent, the spouse may apply to the court for leave to enter into a marriage contract .

Article 3.103. The form of a marriage contract

A marriage contract must be entered into before the notary public. .

A marriage contract as well as its subsequent amendments must be registered in the register of marriage contracts maintained by mortgage institutions in the procedure laid down by the rules of the register. A marriage contract may be amendment only with leave of the court. In no case may the amendments of a marriage contract be retroactive.

A marriage contract and its amendments may be used against third parties provided the settlement and its amendments have been registered in the register of marriage contracts . This rule shall not apply if at the time of the transaction the third parties knew of the marriage contract and its amendments.

Article 3.104. Content of a marriage contract

Spouses shall have a right to stipulate in the marriage contract that:

1) property acquired both before and during the marriage shall be the individual property of each spouse;

2) individual property acquired by a spouse before the marriage shall become joint community property after the registration of the marriage;

3) property acquired during the marriage shall be joint community property.

In their marriage contract the spouses may stipulate that one of the matrimonial legal regimes referred to in Paragraph 1 of his Article shall be applied to their entire property or only to its certain part or to specified chattels.

In their marriage contract the spouses may define a matrimonial legal regime both in respect of their existing and future property.

A marriage contract may contain the stipulation of rights and duties related to the management of property, mutual maintenance, participation in the provision for family needs and expenses as well as the procedure for partitioning property on divorce and other matters related to the spouse’s mutual relations in property.

The rights and duties of the spouses provided for in their marriage contract may be limited in time, or the emergence or termination of rights and duties may be related to the fulfilment or omission of a certain condition stipulated in the marriage contract.

Article 3.105. Nullity of conditions in a marriage contract

Conditions stipulated in a marriage contract shall be null and void if they:

1) contradict the mandatory legislative rules, good morality and public order;

2) change the legal regime in respect of the individual property of one of the spouses or in respect of their joint community property (Articles 3.88 and 3.89) where the matrimonial legal regime the spouses have chosen provides for joint community property;

3) prejudice the principle of equal parts in joint community property enshrined in Article 3.117 hereof;

4) restrict the passive or active legal capacity of the spouses;

5) regulate the personal relations of the spouses unrelated to property;

6) establish or change the personal rights and duties of the spouses towards their children;

7) limit or annul the right of one (or both) of the spouses to maintenance;

8) limit or annul the right of one (or both) of the spouses to bring legal proceedings in court;

9) change the procedure and conditions of succession in property.

Article 3.106. Amendments and termination of a marriage contract

A marriage contract may be amended or terminated by the mutual agreement of the spouses at any time in the same form as that laid down for its formation.

An amendment to a marriage contract or its termination may be used against third parties provided the amendment or termination of the marriage contract has been registered in the register of marriage contracts settlements. This rule shall not be applied if at the time of the transaction the third parties knew of the amendment or termination of the marriage contract .

At the request of one of the spouses a marriage contract may be amended or terminated by the judgement of the court on the grounds provided for in Book Six hereof for the amendment or termination of a marriage contract.

The creditors of one or both of the spouses whose rights have been prejudiced by the amendment or termination of the marriage contract may, within a year of becoming aware of the amendment or termination, challenge in court such an amendment or termination and require the restoration of their rights.

Article 3.107. Termination of a marriage contract

A marriage contract shall terminate on divorce or on separation except in respect of the duties which under the agreement remain in force on divorce or separation. The termination of a marriage contract shall be registered in the register of marriage contracts.

Article 3.108. Nullity of a marriage contract

In addition to the grounds provided for in Article 3.105 hereof, a marriage contract may be declared null and void, wholly or in part, on the grounds for the nullity of transactions provided for in Book One hereof.

The court may declare a marriage contract null and void at the request of one of the spouses if the agreement is in serious breach of the principle of equality or is especially unfavourable for one of the spouses.

The creditors of one or both of the spouses shall have a right to demand that the agreement be declared null and void because it is fictitious.

CHAPTER VII

CIVIL LIABILITY OF SPOUSES FOR OBLIGATIONS IN PROPERTY

Article 3.109. Obligations discharged from community property

The following obligations shall be discharged from the community property of spouses:

1) obligations related to the encumbrances of property acquired in co-ownership that existed at the time of acquisition or were created later;

2) obligations related to the costs of managing community property;

3) obligations related to the maintenance of the household;

4) obligations related to legal expenses where the action is related to community property or the interests of the family;

5) obligations arising from transactions made by one of the spouses with the consent of the other spouse or ratified by the latter subsequently as well as obligations arising from transactions for which no consent of the other spouse was required provided that the transactions were made in the interests of the family;

6) joint and several obligations of the spouses.

Either spouse shall have a right to enter into transactions necessary to maintain the family and to secure the upbringing and education of the children. Both spouses shall be jointly and severally liable for the obligations arising from such transactions whatever their matrimonial regime may be except in cases where the price of the transactions is clearly too high and unreasonable.

Joint and several liability of the spouses shall not be created where one of the spouses takes a loan or acquires goods under credit purchase , which is not necessary for the needs of the family, without the consent of the other spouse.

In creating and discharging obligations related to the needs of the family the spouses shall be as prudent and careful as in creating and discharging their own personal obligations .

Article 3.110. Liability of spouses for obligations created before the registration of marriage

Community property may not be used to discharge the obligations of spouses created before the registration of marriage except those charged against the relevant spouse’s share in community property.

The claims of the spouses’ common creditors to be discharged from community property shall take precedence over the claims of the separate creditors of each spouse. This rule shall not apply to mortgage creditors.

Article 3.111. Obligations arising from gift agreements or succession

Where one of the spouses receives a gift or comes into inheritance, the obligations arising therefrom may not be paid from community property unless the gift or the inheritance has been received as community property.

Article 3.112. Liability for the obligations of one of the spouses

Claims arising from the transactions made after the registration of marriage by one of the spouses without the consent of the other spouse may be discharged from community property if the individual property of the spouse is not sufficient to meet the claims of the creditors.

Legal expenses shall be discharged from the individual property of a spouse if the lawsuit is not related to community property or the interests of the family.

Article 3.113. Enforcement against the individual property of spouses

Where the community property is not sufficient to meet the joint and several claims of creditors, the claims shall be discharged met from the individual property of the spouses.

Article 3.114. Separation of the liability of spouses

If the marriage contract stipulates that property acquired both before and during marriage is to be treated as the individual property of one and the other spouse, the spouses shall be liable for their obligations only by their individual properties. In such cases the spouses shall be jointly and severally liable for their joint obligations and the obligations in the interests of the family.

Spouses shall not be held to be each other’s guarantors or surety in obligations arising in the management or disposal of property that is a individual property of one and the other spouse.

Article 3.115. Entitlement to compensation

The spouse whose fines for breaches of law or damages incurred through his or her actions have been paid from the joint community property shall be obliged to compensate for the reduction of the joint community property.

If a transaction was made to meet the personal needs of only one of the spouses by using joint community property, that spouse shall be obliged to compensate for the reduction of the joint community property.

CHAPTER VIII

DIVISION OF JOINT COMMUNITY PROPERTY

Article 3.116. Ways of division

On the application of one of the spouses or their creditors, joint community property may be divided by the mutual agreement of the spouses or by a court judgement during marriage and on divorce or separation.

The rules of this Chapter shall be applicable where the spouses have not made a marriage contract.

Article 3.117. Shares of the spouses in joint community property

The shares of the spouses in joint community property shall be presumed to be equal.

Departure from the principle of the equality of the shares of the spouses in joint community property shall be permitted only in cases provided for herein.

Where the value of the property awarded by the court to one of the spouses is greater than his or her share in the joint community property, that spouse shall be obliged to pay a compensation to the other spouse. Upon the presentation of an adequate security for this liability, the court may defer the payment of the compensation for no longer than two years.

On the death of one of the spouses, his or her share in the joint community property shall be inherited on the heirs according to the rules of Book Five hereof.

Article 3.118. Balance of property

Before partitioning the joint community property of the spouses, first the community property and the respective individual property of the spouses shall be established.

The community property shall first be used to pay (award) the debts that have fallen due and are payable from this property. Where the time limit for meeting the liabilities from the community property has not expired or the liabilities are disputed, the value of the community property to be partitioned shall be reduced by the amount of these liabilities (debts).

After establishing the individual property of the spouses and deducing their personal debts from it, a balance sheet of compensations shall be drawn up indicating the amounts one or the other spouse must pay by way of compensating for the community property or receive from the community property.

Where the balance of community property is positive it is divided equally between the spouses, except in cases provided for herein.

Article 3.119. Assessment of the value of property

The value of the community property to be partitioned shall be established at its market value on the date of the termination of the joint community property of the spouses.

Article 3.120. Property not to be partitioned

Property to be partitioned shall not include chattels intended for the needs of the minor children of the marriage or the spouses’ clothing, personal effects, personal property interests and non-property rights related only to that particular spouse.

Property intended to meet the needs of the minor children referred to in Paragraph 1 shall go, without deducing any compensations, to the spouse with whom the minor children are to live, while the remaining part of the property of personal nature goes to one and the other spouse.

Article 3.121. Attribution of individual property to joint community property

By the mutual consent of the spouses, property defined as the individual property of the spouses in the marriage contract may be attributed to the joint community property subject to partitioning.

Arrangements referred to in Paragraph 1 shall be prohibited if they can cause damage to the creditors of the spouse. Where due to such arrangements the claims of the creditor cannot be fully covered from the individual property of a spouse, the debt shall be charged against the spouse’s share in the community property.

Article 3.122. Security for the claims to a share in the community property

At the request of one of the spouses or a spouse’s creditors, the court may seize the joint community property of the spouses or to appoint an administrator for the property if that is necessary to protect the interests of the spouses in the community property or the rights of their creditors. These measures shall not be applicable where the other spouse submits an adequate security for the claims of the spouse requesting the seizure of the property or the appointment of an administrator or for the claims of the creditors.

Article 3.123. Departure from the principle of the equality of the shares of the spouses in the community property

Having regard to the interests of the minor children, the health state or the financial position of one of the spouses or other important circumstances, the court may depart from the principle of the equality of the spouse’s shares in the community property and award one of the spouses a greater portion of the property. These criteria must also be taken into consideration by the court in deciding on the way of partitioning community property.

The share of the spouse obliged to make maintenance payments to the other spouse may be reduced by the amount of the maintenance if it is to be paid by a lump sum or certain property given in payment.

Where, less than a year before the institution of the action for the partitioning of the property, one of the spouses reduced the value of the community property without the consent of the other spouse by donating some of it or by using it to increase his or her own individual property, the portion of this spouse in the community property may be reduced while establishing the respective portions of the spouses in the community property by the value of the lost community property.

The share of one of the spouses in the community property may also be reduced by the amount of income unrealised due to the spouse’s negligence or because he or she concealed the income from the family and used it for his or her personal needs. The period for which such unrealised income is calculated should not exceed five years before the institution of the lawsuit for the division of property.

Article 3.124. Division of property by the court judgement without divorce

Where one of the spouses has been declared incapable or of limited active capacity or where one of the spouses manages community property in a loss-making way or by his or her actions jeopardises the joint community property of the spouses or the interests of the family or without any justified reason fails to contribute to the needs of the family, the other spouse shall have a right to bring an action seeking a division of the property.

Article 3.125. Registration of division of property

The agreement of the parties or the judgement of the court under which the joint community property of the spouses is divided must be registered with the mortgage office that has registered the marriage contract or the division of property by making a relevant entry in the register of marriage contracts .

Article 3.126. Guarantees of the rights of the creditors

The creditors of one or both of the spouses shall have a right to participate as third parties in the lawsuit for the division of joint community property and present their own individual claims.

In his or her application the spouse who institutes proceedings for the division of property must indicate the creditors of one or both of the spouses he or she is aware of and notify the creditors of the institution of proceedings by sending them a copy of the application.

Article 3.127. Property to be divided

The court shall divide the property the spouses acquired as joint community property before the institution of the proceedings or before the day the court hands down its judgement.

On the application of one of the spouses the court may decide to divide only the property acquired before the separation of the spouses.

If possible, the property is divided in kind having regard to its value and the share of each spouse in the community property. If the property cannot be divided in kind, it is awarded in kind to one of the spouses, who is ordered to compensate for the other spouse’s share in money. The decision on the way the property is to be divided and the actual division of property in kind is taken having regard to the interests of the minor children, the state of health and the financial situation of one of the spouses as well as to other important circumstances.

Article 3.128. Mutual obligations of spouses after the division of property without divorce

The spouse on whose application the property has been divided must, to the extent of his or her possibilities, contribute to the maintenance of the household and the upbringing and education of the children.

Where for objective reasons the other spouse cannot contribute to the maintenance of the household or the upbringing and education of the children, all such expenses must be covered by the spouse on whose application the property has been divided.

When dividing the property, the court may award an amount of money from one spouse to the other to be used for the repayment of the outstanding debts of the marriage to the third parties.

Article 3.129. Limitations

Claims for the division of joint community property, except for immovables, may be made within five years of the date of the separation of the spouses.

PART IV

MUTUAL RIGHTS AND DUTIES OF CHILDREN AND PARENTS

CHAPTER IX

CONSANGUINITY AND AFFINITY

Article 3.130. Concept of consanguinity

Consanguinity is relationship by blood of persons descended from the same stock or common ancestor.

Consanguinity shall give rise to legal consequences only in cases provided for by the law.

Relationship between adopted children (and their descendants) and their adoptive parents (and their kindred) shall be treated as consanguinity.

Article 3.131. Lines of consanguinity

Two lines of consanguinity – direct and collateral consanguinity – shall be distinguished.

Article 3.132. Direct consanguinity

Direct consanguinity is that which subsists between the ancestor and the descendants in the direct line from one of the other (great-grandparents, grandparents, parents, children, grandchildren, great-grandchildren, etc.)

Consanguinity upward from the descendant to the ancestor is the direct ascending line (grandchildren, children, parents, grandparents, etc.)

Consanguinity downward from the ancestor to the descendant is the direct descending line (grandparents, parents, children, grandchildren, etc.)

Article 3.133. Collateral consanguinity

Collateral consanguinity is that which subsists between persons who have the same ancestors, but who do not descend one from the other ( siblings, cousins, uncles or aunts, nephews and nieces, etc.)

Article 3.134. Degree of consanguinity

A degree of relationship is measured by the number of related births other than the birth of the ancestor (ancestors).

Only the degrees of relationship laid down by the law shall give rise to legal consequences.

Article 3.135. Close relatives

Close relatives shall embrace persons related by direct consanguinity up to the second degree of consanguinity inclusively (parents and children, grandparents and grandchildren) and persons related in the second degree of kinship by collateral consanguinity (siblings).

Article 3.136. Affinity

Affinity is the connection, in consequence of a marriage, between one of the spouses and the kindred of the other spouse (stepson, stepdaughter, stepfather, stepmother, father-in-law, mother-in-law, daughter-in-law, etc.) as well as between the kindred of both spouses (the husband’s brother or sister and the wife’s brother or sister, the husband’s father and mother and the wife’s father or mother, etc.)

Affinity shall give rise to legal consequences only in cases provided for by the law.

CHAPTER X

FILIATION

SECTION ONE

GENERAL BASIS FOR FILIATION

Article 3.137. Legitimate filiation of a Child

Legitimate filiation of a child shall be confirmed in the procedure laid down in Articles 3.138 to 3.140 hereof.

The mutual rights and duties of the child and his or her parents shall be based on the legitimate filiation of the child.

A child’s legitimate filiation from the parents shall be confirmed from the date of birth and shall create the respective rights and duties laid down by the law from that date.

Article 3.138. Proof of legitimate filiation

The parents of a child shall be proved by the record of birth in the Registrar’s Office and by the certificate of birth issued on the basis thereof.

Article 3.139. Maternal affiliation

A woman shall be entered as a child’s mother in the records of a Registrar’s Office on the basis of the certificate of the child’s birth issued by a hospital.

Where the child is born not in a hospital, the certificate of the child’s birth shall be issued by a medical centre that makes a postnatal examination of the mother’s and the baby’s health.

If the child is born not in a hospital and no postnatal examination of the mother’s and the baby’s health is made, the certificate of the child’s birth shall be issued by a consulting commission of doctors in the procedure laid down by the Government. According to such a certificate the mother of the baby is the woman in respect of whom the consulting commission of doctors have no doubt that it was she who gave birth to the baby.

If the record of the child’s birth contains no data on the child’s mother or if the maternity of the child has been successfully contested, the child’s mother may be established by the court in an action filed by the woman who considers herself to be the child’s mother, by the adult child, by the child’s father or guardian/curator or by the state institution for the protection of the child’s rights.

Article 3.140. Paternal affiliation

Where a married woman gives birth to a baby, although the baby may have been conceived before the marriage, the man identified as the spouse of the baby’s mother in the marriage record or the marriage certificate issued on the basis thereof shall be identified as the baby’s father in the record of the baby’s birth.

Where a child is born within three hundred days of the date of separation or the annulment of the marriage or divorce or the death of the husband, the ex-spouse of the mother shall be recognised as the child’s father.

Where a mother who contracted a new marriage within less than three hundred days of the dissolution of her previous marriage gives birth to a baby, the new spouse of the mother shall be considered to be the baby’s father.

Where an unmarried woman gives birth to a baby after more than three hundred days have elapsed from the dissolution of her previous marriage, the man who has acknowledged his paternity in the procedure established in this Book or whose paternity has been established by a judicial judgement may be identified as the baby’s father in the record of the baby’s birth.

Where a divorced mother gives birth to a baby within less than three hundred days of the divorce, the baby’s mother, her ex-husband and the man who acknowledges his paternity of the child shall have a right to file a joint application seeking that the man who acknowledges his paternity of the child be identified as the baby’s father. After the court approves such a joint application, the man who acknowledges his paternity of the child rather than the ex-husband of the baby’s mother shall be entered in the record as the baby’s father.

SECTION TWO

ACKNOWLEDGEMENT OF PATERNITY

Article 3.141. Conditions for the acknowledgement of paternity

Where the record of the baby’s birth contains no data on the baby’s father, the paternity of the baby may be determined on the basis of the application of the man who considers himself father of the baby.

Where a baby is born to a married mother or the baby is born within less than three hundred days of the dissolution of the marriage, the paternity of the baby may be determined on the basis of an application provided the paternity of the present or former spouse of the mother has been successfully contested.

If the adjudication of paternity on the basis of an application acknowledging paternity has been contested, determination of paternity on another application acknowledging paternity is inadmissible.

There shall be no period of limitation applicable to acknowledgement of paternity.

Article 3.142. Procedure for acknowledging paternity

The man considering himself the father of a child shall have a right to file an application of a standard form certified by a notary public with the Registrar’s Office seeking to be recognised as the father of the child.

Where the child has attained the age of 10, the Registrar’s Office may accept an application for the recognition of the child’s paternity only with a written consent of the child.

Where the man acknowledging his paternity of a child is a minor, the filing of an application for the recognition of paternity with the Registrar’s Office requires the written consent of the minor’s parents, guardians or curators or care institutions. If the parents, guardians or curators or care institutions refuse to give their consent, such a leave may be handed down by the court at the minor’s request.

Article 3.143. Acknowledging paternity before the child’s birth

If there are circumstances that will bar the filing of an application acknowledging the paternity of a child after the birth of the baby, the man considering himself the father of the child conceived but not yet born may file a joint application with the child’s mother for the recognition of his paternity for the period of pregnancy with the Registrar’s Office of the district where the child’s mother resides.

The application acknowledging the paternity of a child before the child’s birth shall be accompanied with the certificate of pregnancy issued by a medical centre.

Where before the child’s birth the child’s mother marries the man who has filed an application acknowledging his paternity of the child, or another man, the paternity of the child may not be confirmed after the birth of the child on the basis of that application.

Where the child’s mother or the man who has filed an application acknowledging the paternity of the child before the birth of the child withdraws the application before the birth of the child has been recorded with the Registrar’s Office, the child’s paternity on the basis of that application shall not be registered.

Article 3.144. Acknowledging paternity without the consent of the child’s mother

Where the child’s mother is dead, incompetent or cannot, for other reasons, file a joint application with the child’s father for the recognition of his paternity, or the parents or guardian/curator of the man who considers himself the father of the child, but who is a minor or of limited legal competence, refuse to recognise his paternity or the child of 10 or over does not give his or her written consent, the application acknowledging paternity may be considered a valid basis for the registration of paternity if the court approves the application.

In examining an application acknowledging paternity where the child’s mother is dead, incompetent or cannot, for other reasons, file a joint application with the man acknowledging to be the child’s father, the court must require that the child’s father adduce evidence corroborating his paternity of the child.

The application acknowledging the paternity of a child may not be registered without the consent of the child who is of full age.

Article 3.145. Examination of the application for the approval of the acknowledgement of paternity

The court shall examine applications for the approval of the acknowledgement of paternity in a simplified procedure.

The res judicata judgement on the approval of the application acknowledging a child’s paternity shall be sent to the Registrar’s Office that has registered the birth of the child within three business days.

Where the application for the approval of the acknowledgement of a child’s paternity is contested by the parents or guardians/curators of the minor or the person of limited legal capacity who considers himself the father of the child, the application shall be submitted to the court to be examined by contentious proceedings

SECTION THREE

PATERNITY AFFILIATION

Article 3.146. Conditions for paternity affiliation

Where the child is born out of wedlock, and in the absence of paternal acknowledgement, paternity affiliation may be determined by the court.

Where a child is born to a married woman or the child’s paternity has been ascertained on the basis of an application acknowledging the child’s paternity, paternity affiliation is possible only after a successful contesting of the data concerning the child’s father contained in the record of the child’s birth.

The paternity of a dead person may be ascertained only if the person had offspring.

Article 3.147. Persons entitled to petition for Paternity Affiliation

Where a child is born out of wedlock or the data on the father contained in the record of the child’s birth have been successfully contested , an action for the paternity affiliation may be filed by the man considering himself the father of the child. The child and the child’s mother shall act as defendants in such an action.

If a child’s father refuses to acknowledge his paternity by an application for the approval of his acknowledgement of the child’s paternity or if a child’s father is dead, the action for paternity affiliation may be filed by the child’s mother or the child after having attained full active capacity or the child’s guardian or curator or the state institution for the protection of the child’s rights or the descendants of a child who is dead.

Having determined a child’s paternity, the court shall send its res judicata judgement to the Registrar’s Office that has registered the child’s birth within three business days.

Article 3.148. Grounds for paternity affiliation

Grounds for paternity affiliation shall be scientific evidence (conclusions of expert examinations on consanguinity determination) and other means of proof provided for in the Code of Civil Procedure. If the parties refuse to undergo expert examination, the child’s paternity may be adjudicated on the basis of facts that have a sufficient evidential value, such as the child’s mother’s and the putative father’s life together, their joint participation in the upbringing and maintenance of the child and other evidence.

If the defendant refuses expert examination, the court having regard to the circumstances of the case may treat such a refusal as proof of the defendant’s paternity of the child.

SECTION FOUR

CONTESTING PATERNITY (MATERNITY)

Article 3.149. Conditions for contesting paternity (maternity)

Data on the mother or father of a child contained in the record of the child’s birth may be contested only in court.

Data on the mother or father of a child entered in the record of the child’s birth on the basis of a res judicata judicial decision may not be contested.

Article 3.150. Grounds for contesting paternity (maternity)

The paternity of a child born to a married couple or within three hundred days of the dissolution of marriage may be contested only by proving that the person cannot be the father of the child.

The maternity or paternity of a child adjudicated on the basis of an application acknowledging parentage may be contested by proving that the child’s mother or father not the biological parent of the child.

Actions for contesting paternity or maternity may be filed by the person entered in the record of the child’s birth as the child’s mother or father, or the person who, although not recorded as the child’s mother or father in the record of the child’s birth, considers himself the mother or the father of the child, or the parents or guardians/ curators of the minor entered in the record of the child’s birth as the child’s father, or the child on attaining majority, or a minor on attaining full active capacity.

Where the child’s mother or father is legally incapable or of limited active capacity, an action for contesting maternity or paternity may be filed by his or her guardians or curators.

An action for contesting the paternity of a man who is dead may be filed by his descendants if the person recorded as the child’s father died within the limitation period provided for in Article 3.152 hereof.

Article 3.152. Limitation period for proceedings

The limitation period for filing a suit for contesting paternity (maternity) shall be one year as from the day when the plaintiff became aware of the disputed data in the record of the child’s birth or of certain circumstances giving reason to believe that the data are not truthful.

Where the persons recorded in the record of the child’s birth as a child’s mother or father became aware of such a record at the time when they were minors or legally incapable, the one-year limit shall be calculated from the day they attained majority or full active capacity..

The res judicta court judgement on the annulment of paternity (maternity) shall be sent to the Registrar’s Office that registered the child’s birth within three business days of its effective date.

Article 3.153. Mandatory participation of the agency for the protection of the child’s rights

In adjudicating paternity or disputes over paternity the participation of the agency for the protection of the child’s rights shall be mandatory.

SECTION FIVE

ARTIFICIAL INSEMINATION

Article 3.154. Legal regulation of artificial insemination

The conditions, mode, procedures of artificial insemination as well as matters related to the paternity (maternity) of a child born from artificial insemination shall be regulated by other laws.

CHAPTER XI

PARENTAL RIGHTS AND DUTIES IN RESPECT OF THEIR CHILDREN

SECTION ONE

PARENTAL AUTHORITY

Article 3.155. Substance of paternal authority

Until they attain majority or emancipation, children shall be cared for by their parents.

Parents shall have a right and a duty to properly educate and bring up their children, care for their health and, having regard to their physical and mental state, to create favourable conditions for their full and harmonious development so that the child should be ready for an independent life in society.

Article 3.156. Equality of paternal authority

The father and the mother shall have equal rights and duties in respect of their children.

Parents shall have equal rights and duties by their children irrespective of whether the child was born to a married or unmarried couple, after divorce or judicial nullity of the marriage or separation.

Article 3.157. Representation of children

Legally incapable children shall be represented by their parents under the law, except where the parents have been declared legally incapable by a court judgement.

Parents shall represent their children on the presentation of the child’s birth certificate.

Article 3.158. Authority of minor-aged parents

Minor parents with full active capacity shall have all personal rights and duties in respect of their children.

Minor parents who are legally incapable or of limited active capacity shall have a right to live to together with their child and participate in the child’s education. In such cases a guardian/foster person shall be appointed to the child in the procedure provided for in this Book hereof.

On attaining majority or full active capacity, the parents shall acquire all the rights and duties in respect of their children.

Article 3.159. Mandatory exercise of parental authority

A father’s or mother’s surrender of the rights and duties by his or her underage children shall be null and void.

Parents shall be jointly and severally responsible for the care and education of their children.

Parental authority may not be used contrary to the interests of the child.

Failure to exercise parental authority shall be subject to legal responsibility under the law.

Article 3.160. End of parental authority

Parental rights and duties shall end when the child attains majority or full active capacity.

In certain cases considered in the light of the child’s interests, parental authority may be limited on a temporary or permanent basis or the child may be separated from the parents in the procedure laid down in this Book hereof.

SECTION TWO

CHILDREN’S RIGHTS AND DUTIES

Article 3.161. Children’s rights

Every child shall have an inalienable right to life, healthy development and a name and surname from birth.

A child shall have a right to know his or her parents unless that prejudices his or her interests or the law provides for otherwise.

A child shall have a right to live with his or her parents, be brought up and cared for in his or her parents’ family, have contact with his or her parents no matter whether the parents live together or separately, have contact with his or her relatives, unless that is prejudicial to the child’s interests.

Children shall have no ownership rights to the property of their parents and the parents shall have no ownership rights to the property of their children. Children’s property rights are defined in this and the other Books hereof.

Children born within or outside marriage shall have equal rights.

Children’s rights shall not be affected by their parents’ divorce, separation or nullity of marriage.

Article 3.162. Children’s duties

Children shall owe respect to their parents and perform their duties by their parents diligently.

Article 3.163. Assurance of children’s rights

The rights of minor-aged children shall be assured by the parents.

The rights of children deprived of parental care shall be assured by the guardian/curator according to the rules laid down in this Book.

After a minor attains full active capacity, the protection of his or her rights shall be his or her own responsibility.

If the parents or guardians/curators abuse their children’s rights, measures to defend the children’s rights may be taken by the state institution for the protection of the child’s rights or a prosecutor.

Article 3.164. Involvement of a minor in the assurance of his or her rights

In considering any question related to a child, the child, if capable of formulating his or her views, must be heard directly or, where that is impossible, through a representative. Any decisions on such a question must be taken with regard to the child’s wishes unless they are contrary to the child’s interests. In making a decision on the appointment of a child’s guardian/curator or on a child’s adoption, the child’s wishes shall be given paramount consideration.

If a child considers that his or her parents abuse his or her rights, the child shall have a right to apply to a state institution for the protection of the child’s rights or, on attaining the age of 14, to bring the matter before the court.

SECTION THREE

PERSONAL PARENTAL RIGHTS AND DUTIES

Article 3.165. Substance of personal parental rights and duties

Parents shall have a right and duty to bring up their children; they shall be responsible for their children’s education and development, their health and spiritual and moral guidance. In performing these duties, parents shall have a priority right over the rights of other persons.

Parents must create conditions for their children to learn during their compulsory school age.

All questions related to the education of their children parents shall decide by mutual agreement. In the event of the lack of agreement, the disputed matter shall be resolved by the court.

Article 3.166. Giving a child a name

Every child shall be given a name by his or her parents.

A child may be given two names.

A child shall be given a name by the mutual agreement of the parents. Where the child’s mother and father cannot agree on the name, the child shall be given a name by a judicial order.

While registering the birth of a child whose parents’ identity is not known, the child shall be given a name by the state institution for the protection of the child’s rights.

Article 3.167. Giving a child a surname

Every child shall be given his or her parents’ surname.

Where the surnames of the child’s parents are different, the child shall be given the mother’s or the father’s surname by the mutual agreement of the parents. If the parents cannot agree, the child shall be given the surname of one of the parents by a judicial order.

While registering the birth of a child whose parents’ identity is not known, the child shall be given a surname by the state institution for the protection of the child’s rights.

The grounds and procedures for changing a child’s name or surname shall be subject to the Rules of the Registration of Civil Status approved by the Minister of Justice.

Article 3.168. A child’s residence

An underage child’s residence shall be determined in accordance with the rules of Book Two hereof.

A child may not be separated from his or her parents against his or her will, except in cases provided for in this Book.

Parents shall have a right to demand the return of their children from any person who keeps them against the law or a court judgement.

Article 3.169. A child’s residence where the parents are separated

Where the parents are separated, the child’s residence shall be decided by the mutual agreement of the parents.

In the event of a dispute over the child’s residence, the child’s residence shall be determined by a residence order awarded by the court in favour of one of the parents.

If the circumstances change or if the parent with whom the child was to live lets the other parent live with and bring up the child, the other parent may file a second suit for the determination of the child’s residence.

Article 3.170. The right of the separated parent to have contact with the child and be involved in the child’s education

The father or the mother who lives separately from the child shall have a right to have contact with the child and be involved in the child’s education.

A child whose parents are separated shall have a right to have constant and direct contact with both the parents irrespective of their residence.

The father or the mother with whom the child resides may not interfere with the other parent’s contacts with the child or involvement in the child’s education.

Where the parents cannot agree as to the involvement of the separated father or mother in the education of and association with the child, the procedure of the separated parent’s association with the child and involvement in the child’s education shall be determined by the court.

The separated father or mother shall have a right to receive information about the child from all the institutions and authorities concerned with the child’s education, training, health care, protection of the child’s rights, etc. Such information may be denied only in cases where the child’s life or health is imperilled by the mother or the father and in cases provided for by the law.

The refusal of authorities, organisations, institutions or natural persons to provide information to the parents about their children may be brought before the court.

Article 3.171. Contact with the child and involvement in the child’s education in special circumstances

Parents shall maintain contact and be involved in the education of the child who is placed in a special situation (detention, arrest, imprisonment, in-patient clinic, etc.) in the procedure laid down by the law.

Article 3.172. Contact of other relatives with the child

Parents (or guardians/curators if there are no parents) shall be obliged to create conditions for the children to associate with their next of kin provided that it is consistent with the children’s interests.

SECTION FOUR

DISPUTES OVER CHILDREN

Article 3.173. Disputes over the name or surname of the child

If a child’s parents cannot agree on a name or surname to be given to the child, the child’s father, mother or the parents (guardians/curators) of the child’s legally incapable minor-aged parents shall have a right to petition to the court for an order giving the child a name or a surname.

The court shall deal with a petition for an order giving a child a name or a surname in the simplified procedure and, having heard the parents or having received their written explanations, shall hand down such an order.

Article 3.174. Disputes over a child’s residence

Petitions for the determination of a child’s residence may be filed by the child’s father, mother, also by the parents or guardians/curators of the child’s minor-aged parents of limited active capacity.

The court shall resolve the dispute having regard to the interests of the child and the child’s wishes. The child’s wishes may be disregarded only if they are contrary to the best interests of the child.

Article 3.175. Disputes of separated parents over contact with the child or involvement in the education of the child

Petitions for contact or involvement in the child’s education orders may be filed by the child’s father, mother or the parents (guardians/curators) of the child’s legally incapable minor-aged parents.

The court shall determine the procedure for the separated parent’s contact with the child by taking into consideration the child’s interests and by creating a possibility for the separated parent to be involved in the education of the child to the greatest extent possible. Minimal contact with the child may be ordered only in cases where constant maximal contact is prejudicial to the child’s interests.

Article 3.176. Disputes over the child’s contact with his or her close relatives

If the parents refuse to create conditions for their children to have contact with their close relatives, the state institution for the protection of the child’s rights shall obligate the parents to create such conditions.

The state institution for the protection of the child’s rights may refuse to obligate the parents to create conditions for their child’s contact with his or her next of kin if such contact is contrary to the child’s interests.

If the parents fail to comply with the obligation of the institution for the protection of the child’s rights or the child’s next of kin do not agree with the decision of the state institution for the protection of the child’s rights refusing to oblige the child’s parents to create conditions for their contact with the child, the child’s next of kin may bring the matter before the court.

The court having regard to the child’s interests may oblige the parents to create conditions for their child’s contact with the close relatives provided it is not contrary to the child’s interests.

Article 3.177. The child’s right to express his or her views

When adjudicating on disputes over children, the court must hear the child capable of expressing his or her views and ascertain the wishes of the child.

Article 3.178. Mandatory participation of the state institution for the protection of the child’s rights

The state institution for the protection of the child’s rights must participate in the examination of disputes over children.

Having investigated the conditions in the family environment, the state institution for the protection of the child’s rights shall present its opinion to the court. In adjudicating the dispute, the court shall take into consideration not only the opinion, but also the wishes of the child and the evidence adduced by the other parties.

SECTION FIVE

RESTRICTION OF PARENTAL AUTHORITY

Article 3.179. Separation of parents and children

Where the parents (the father or the mother) do not live together with the child for objective reasons (illness, etc.) and the court has to decide where the child is to live, the court may decide to separate the child from the parents (the father or the mother). Where only one of the parents is affected by unfavourable circumstances while the other parent can live and bring up the child, the child shall be separated only from that parent.

The child separated from the parents shall retain all the personal and property rights and duties based on consanguinity.

When a child is separated from the parents (the father or the mother), the parents lose their right to live together with the child or demand the return of the child from other persons. The parents may exercise their other rights in so far as that is possible without living together with the child.

Article 3.180. Conditions, methods and consequences of the restriction of parental authority

Where the parents (the father or the mother) fail in their duties to bring up their children or abuse their parental authority or treat their children cruelly or produce a harmful effect on their children by their immoral behaviour or do not care for their children, the court may make a judgement for a temporary or unlimited restriction of parental power (that of the father or the mother.)

The court shall make judgements for temporary or unlimited indefinite restriction of parental authority (that of the father or the mother) by having regard to the circumstances of the case that require a restriction of parental authority. Parental authority may be restricted unlimitedly only where the court makes the conclusion that the parents (the father or the mother) do very great harm to the development of the child or do not care for the child and no change in the situation is forthcoming.

Temporary or unlimited restriction of parental authority involves the suspension of the personal and property rights of the parents based on consanguinity and under the law. The parents, however, shall retain the right of visitation, except where that is contrary to the child’s interests. Where parental authority is restricted unlimitedly, the child may be adopted without the consent of the parents.

Restriction of parental authority shall extend only to the children and to the parent in respect of whom the court has made the judgement.

Article 3.181. Cancellation of the restriction of parental authority or the replacement of the kind of limitation with another kind of limitation

The separation of a child from the parents (the father or the mother) may be revoked after the disappearance of the circumstances that caused the order for separation.

A temporary or unlimited restriction of parental authority may be revoked on the proof that the parents (the father or the mother) have changed their conduct and can bring up their child and if the cancellation of the restriction is not contrary to the interests of the child.

Where the circumstances have changed, but the grounds for a complete cancellation of the unlimited restriction of parental authority are insufficient, the indefinite limitation of parental authority may be replaced with a temporary restriction of parental authority.

If it transpires that the circumstances why the child may not live together with the parents remain after the cancellation of the temporary or unlimited restriction of parental authority, the temporary or unlimited restriction of parental authority may be replaced with an order for the separation of the child from the parents.

Where the parents (the father or the mother) separated from their children exercise their parental authority contrary to the interests of the children, their parental authority may be subject to temporary or unlimited restriction.

Restriction of parental authority may be revoked only if the child has not been adopted.

Article 3.182. Persons entitled to seek restriction of parental authority or the cancellation of the limitation of parental authority

An application for the separation of a child from the parents (the father or the mother) may be filed by the child’s parents or close relatives or the state institution for the protection of the child’s rights or a public prosecutor.

An action for a temporary or unlimited restriction of parental authority may be brought by one of the parents or close relatives or the state institution for the protection of the child’s rights or a public prosecutor or the guardian/curator of the child.

An action for the cancellation of the restriction of parental authority may be brought by the parents (the father or the mother) to whose parental authority the restriction has been applied.

An application for the cancellation of the order on the separation of the child from the parents (the father or the mother) may be filed by the parents or one of the parents, or the guardian/curator or close relatives of the child or the state institution for the protection of the child’s rights or a public prosecutor.

Article 3.183. Examination of application for the restriction of parental authority

Applications for the separation of children from the parents shall be examined in a simplified procedure. If it transpires that there is a ground for temporary or unlimited restriction of parental authority, the application shall be referred to the court to be adjudicated in contentious proceedings.

In examining actions for the restriction of parental authority or applications for the separation of a child from the parents referred to it for adjudication in contentious proceedings, the court shall not be bound by the subject matter of the action and shall pass a judgement by taking account of the situation in hand and the interests of the child.

The court shall hear the child capable of expressing his or her views and take such views into account.

Having made a judgement to restrict parental authority, the court shall simultaneously place the child under guardianship (curatorship) and determine the residence of the child by the same judgement..

Article 3.184. Mandatory participation of the state institution for the protection of the child’s rights

The state institution for the protection of the child’s rights must participate in the examination of cases for the restriction of parental authority.

Having investigated the conditions of the family, the state institution for the protection of the child’s rights shall present its opinion to the court. The court shall take the opinion into consideration together with the evidence adduced in the case.

CHAPTER XII

MUTUAL PROPERTY RIGHTS AND DUTIES OF PARENTS AND CHILDREN

SECTION ONE

PARENTAL RIGHTS AND DUTIES RELATED TO THE PROPERTY OWNED BY THE CHILDREN

Article 3.185 Management of the property owned by underage children

Property owned by underage children shall be managed by the parents under right of usufruct. The parents’ right of usufruct may not be pledged or sold or assigned or encumbered in any way, no execution may be made against it.

Parents shall manage the property that belongs to their underage child by mutual agreement. In the event of a dispute over the management of the child’s property, either parent may petition for a judicial order establishing the procedure for the management of the property.

Where the parents, or one of the parents, cause harm to the child’s interests by mismanaging their underage child’s property, the state institution for the protection of the child’s rights or a public prosecutor may apply to the court for the removal of the parents from the management of the property that belongs to their underage child. Where warranted, the court shall remove the parents from the management of their underage child’s property, revoke their right of usufruct to the child’s property and appoint another person an administrator of the minor’s property. Where the grounds for the removal are no longer existent, the court may allow the parents to resume the management of their underage children’s property under right of usufruct.

Article 3.186. The duties of the parents in managing their underage children’s property

Parents must manage their underage children’s property by giving paramount consideration to the interests of the children.

The parents may use the fruits and income derived from their underage child’s property to meet the needs of the family by taking account of the child’s interests.

In managing the property of their underage child, the parents have no right to acquire, directly or through intermediaries, this property or any rights to it. This rule shall also be applicable to auctioning a minor’s property or interests in it. An action to have such transactions declared null and void may be brought by the child or the child’s successors.

The parents of an underage child may not enter into a contract of assignment of claim under which they would acquire the right of claim to their underage child’s property or the child’s rights to it.

Article 3.187. Property of minors not subject to the right of usufruct

Parents shall have no right to manage the property under right of usufruct if that property

1) has been acquired for the money earned by the child;

2) is intended for the purposes of the child’s education, hobbies or leisure;

3) has been devolved to the child by donation or succession on condition that it will not be made subject to usufruct.

Article 3.188. Transactions relating to an underage child’s property

Without the prior leave of the court parents shall have no right to:

1) alienate or charge their underage children’s property or encumber the rights to it in any other way;

2) accept or decline to accept inheritance on behalf of their underage children;

3) enter into a lease agreement in respect of their underage children’s property for a longer than a five-year term;

4) enter into a an arbitration agreement on behalf of their underage children;

5) enter into a loan agreement on behalf of their underage children for an amount exceeding four minimal monthly wages;

6) invest the funds of their underage children in excess of ten minimal monthly wages.

If a transaction causes a conflict of interests between the underage children of the same parents or between an underage child and the child’s parents, the court, on the application of either of the parents, shall appoint an ad hoc guardian as to the transaction.

Where there is a conflict of interests between an underage child and one of the child’s parents, the child’s interests shall be represented and transactions shall be made by the parent whose interests do not conflict with those of the child.

A breach of the rules laid down in Paragraphs 1, 2 and 3 may cause the court to declare the transaction null and void in an action brought by the child, one of the child’s parents or their successors.

Article 3.189. Prohibition to assign or encumber the right of usufruct

Parents who manage their underage children’s property under right of usufruct may not assign or pledge or encumber the right of usufruct in any way.

The claims of the creditors of underage children’s parents may not be executed against the property of the underage children or against the right of usufruct of their parents.

Article 3.190. Right of usufruct where the property is managed by one of the parents

Where parental authority is exercised only by one of the parents of a minor, the minor’s property shall be managed only by that parent. Where the parents are divorced or separated, the right to manage the minor’s property shall belong to the parent with whom the child is to live.

If the father (mother) of an underage child enters into a new marriage, he or she shall retain the right of usufruct in respect of the underage child’s property, but shall be obliged to transfer all the fruits and income derived from the property to the minor’s bank account and to maintain separate accounts for the fruits in excess of the expenses for the child’s education (training, education, maintenance). If the new spouse of the child’s father (mother) adopts the child, he or she shall also acquire the right to manage the underage child’s property.

Article 3.191. End of the property management and right of usufruct

Parents shall lose the right to manage their underage children’s property under right of usufruct, when:

1) the minor is emancipated under the law;

2) the minor contracts a marriage in the procedure laid down by the law;

3) the minor reaches majority;

4) the court makes an order for the removal of the parents from the management of their underage child’s property;

5) the court separates the children from the parents or limits their parental authority.

Where the parents (or one of the parents with whom the child lives) continue to use the child’s property after the end of the right of usufruct, they shall be obliged to return the property and all the income and fruits derived from the child’s property to the child from the moment when the child or the child’s representative demands it.

SECTION TWO

MUTUAL MAINTENANCE DUTIES OF PARENTS AND CHILDREN

Article 3.192. Parents’ duty to maintain their children

Parents shall be obliged to maintain their underage children. The procedure and form of maintenance shall be determined by the mutual agreement of the parents.

The amount for maintenance must be commensurate with the needs of the children and the financial situation of their parents; it must ensure the existence of conditions necessary for the child’s development.

Both parents must provide maintenance to their underage children in accordance with their financial situation.

Article 3.193. Parental agreement on the maintenance of their underage children

On divorce by mutual agreement (Article 3.51 hereof) or on separation (Article 3.73 hereof) spouses shall make an agreement providing for their mutual duties in maintaining their underage children as well as the procedure, amount and form of such maintenance. The agreement shall be approved by the court (Article 3.53 hereof).

Parents of underage children may conclude an agreement on the maintenance of their children also when their divorce is based on other grounds.

If one of the parents does not comply with the agreement on the maintenance of their underage children approved by the court, the other parent shall be have a right to apply to the court for the issuance of the writ of execution.

Article 3.194. Maintenance orders

If the parents (or one of the parents) fail in the duty to maintain their underage children, the court may issue a maintenance order in an action brought by one of the parents or the child’s guardian (curator) or the state institution for the protection of the child’s rights.

A maintenance order may also be issued if on divorce or on separation the parents did not agree on the maintenance of their underage children in the procedure provided for in this Book.

The court shall issue a maintenance order until the child attains majority except in cases where the child lacks capacity for work due to a disability determined before the age of majority.

The enforcement of the maintenance order shall be terminated when the child:

1) is emancipated;

2) attains majority;

3) is adopted;

4) dies.

If the person obliged to pay maintenance dies, the duty of maintenance shall pass to his or her successors within the limits of the inherited property irrespective of the way the estate is accepted under the rules of Book Five hereof.

Article 3.195. Maintenance duty when the children are separated from their parents

The parents’ duty to maintain their underage children shall be retained after the separation of the children from their parents or the limitation of parental authority except in cases where the child is adopted.

Article 3.196. The form and amount of maintenance

The court may issue a maintenance order obligating the parents (one of the parents) who fail in their duty to maintain their children to provide maintenance to their children in the following ways:

1) periodical monthly payments:

2) a certain lump sum;

3) award of certain property.

Pending the outcome of the case, the court may give a ruling on the provisional payment of maintenance.

Article 3.197. Judicial pledge (hypothec)

If necessary, in making a maintenance order the court may institute pledge (hypothec) against the property of the parents (one of the parents). If the court judgement on the enforcement of the maintenance order is not executed , the maintenance shall be paid against the property subject to the pledge (hypothec).

Article 3.198. Maintenance orders in respect of two or more children

In making a maintenance order in respect of two or more children, the court shall determine a payment amount sufficient to meet at least the minimal needs of all the children.

The maintenance amount shall be used equally for all the children except in cases where objective reasons (illness, etc.) demand a departure from the principle of equality.

Article 3.199. Kinds of income against which maintenance payments shall be made

Maintenance payments for children shall be made against the wages and all the other kinds of income of the parent obliged to pay maintenance.

Article 3.200. The date on which a maintenance order becomes operative

A maintenance order shall take effect from the date on which the right to maintenance becomes operative; the arrears in maintenance payments, however, may not be enforced for a period exceeding three years from the date of the petition for action.

Article 3.201. Changing the amount and form of maintenance

In an action brought by the child, the child’s parent, the state institution for the protection of the child’s rights or a public prosecutor the court may reduce or increase the amount of maintenance if, after the award of the maintenance order, the financial situation of the parties has undergone a fundamental change.

An increase in the amount of maintenance may be ordered if there are additional expenses related to the care for the child (illness, injury, need for nursing or permanent attendance). If necessary, the court may issue an order for covering the future expenses related to the treatment of the child.

At the request of the persons referred to in Paragraph 1 the court may change the previously established form in which maintenance must be provided.

Article 3.202. Enforcement of maintenance to a child placed under guardianship/ (curatorship)

If a child is placed under guardianship/(curatorship), maintenance shall be paid to the guardian who shall use it exclusively for the interests of the child.

If a child receiving maintenance under a judicial order lives in an institution for the care of children , the maintenance shall be paid to the institution for the care of children . In such a case, the institution for the care of children opens a bank account for every child receiving maintenance with a credit institution controlled by the State. The funds on the bank account may be used, in the procedure established by the law, only by the child for its own needs or the child’s guardian (curator) in the child’s interests.

Article 3.203. Use of maintenance

The maintenance payments meant for the child shall be used only for the child’s needs.

Maintenance used by the child’s parents, guardians (curators) for other purposes shall be recovered against the assets of the person who has used the child’s maintenance not for the needs of the child under a judicial order issued in an action brought by the representatives of the child, the state institution for the protection of the child’s rights or a public prosecutor.

Article 3.204. Children maintained by the State

The State shall maintain underage children receiving no maintenance from their parents or adult close relatives who are in a position to maintain the child.

The amount, procedure and conditions of such maintenance shall be established by the Government.

After providing maintenance to an underage child under this Article, the State shall have the right of recourse to recover the maintenance provided to the child from the child’s parents or his other adult close relatives provided the court declared the reasons why they failed to provide maintenance to the child to be insufficient.

Article 3.205. The duty of adult children to maintain their parents

Adult children shall be obliged to maintain their parents who have lost earning capacity and are in need of support.

Maintenance shall be paid according to a mutual agreement between the children and parents or on the basis of the court order issued in an action brought by the parents.

Maintenance shall be provided in monthly payments of an established amount.

The amount of maintenance shall be determined by the court having regard to the financial situation of the children’s family and that of the parents as well as the other important circumstances of the case. In establishing the amount of the maintenance, the court shall have regard to the duty of all the adult children of the parent(s) to maintain their parent(s) irrespective of whether the action for maintenance has been brought against all the children or only one of them.

Article 3.206. Rejection of the parent’s claims to maintenance

The court may relieve adult children of their duty to maintain their parents who have lost earning capacity if it establishes that the parents had failed in their duties in respect of their minor children.

Where the children had been separated permanently from their parents through the fault of the parents, such parents shall have no right to maintenance.

Article 3.207. Compensation for additional expenses of parents who have lost earning capacity

If adult children do not care for their parents who have lost earning capacity, the court may issue an order, in an action brought by the parents, for the compensation of the additional expenses the parents sustained due to illness, injury or indispensable attendance performed by strangers for a consideration.

In adjudicating on the compensation for such additional expenses, the court shall have regard to the financial situation of the children’s family and of the parents as well as the other important circumstances of the case.

Article 3.208. Indexation of maintenance

Where the maintenance is to be made in periodical payments, the maintenance amount shall be indexed annually in accordance with the inflation rates in the procedure established by the Government.

PART V

ADOPTION

CHAPTER XIII

CONDITIONS AND PROCEDURES OF ADOPTION

Article 3.209. Children allowed to be adopted

Adoption should be possible exclusively for the interests of the child.

Only the children who have been included on the list of children offered for adoption may be adopted except in cases where a spouse adopts the other spouse’s child or the child lives in the family of the adopter.

Only children over the age of three months may be adopted.

Adoption of one’s own children, sisters or brother shall be prohibited.

An adopted child may be adopted only by the stepfather’s (stepmother’s) spouse.

Separation of siblings through adoption shall be allowed in exceptional cases where it is impossible to ensure their life together for health reasons or where the siblings have already been separated due to other circumstances and there are no possibilities to ensure their life together.

Article 3.210. Persons entitled to adopt a child

The adopter must be an adult woman or man under the age of 50 duly prepared for adopting a child. In exceptional cases the court may give leave for older persons to adopt a child.

The right to adopt a child may be exercised by married couples. In exceptional cases, an unmarried person or one of the spouses may be allowed to adopt a child.

Unmarried persons may not adopt the same child.

Persons declared legally incapable or of limited active capacity by the court, persons whose parental authority has been restricted the former guardians (curators) whose guardianship/curatorship has been cancelled through their fault shall not be allowed to adopt a child.

Persons who wish to adopt a child (except a parent’s spouse or the relatives) must be listed in the list of prospective adopters managed by the State institution for adoption.

Where several adopters wish to adopt one and the same child, priority shall be given, having regard to the child’s interests, to:

1) relatives;

2) spouses;

3) persons who adopt all the siblings together;

4) citizens of the Republic of Lithuania;

5) persons who adopt the children or adopted children of their spouses;

6) persons in whose family the child to be adopted lives and is maintained.

Article 3.211. Adopter-child age differential

The difference in the age of the adopter and the child to be adopted must be no less than eighteen years.

Where a person adopts the children or adopted children of his or her spouse, the age differential referred to in Paragraph 1 may be reduced to fifteen years.

Article 3.212. Consent of the parents to adoption

Adoption may be effected only with the written consent of the parents confirmed by the court.

Where the child’s parents are minors or legally incapable , adoption may be effected only with the written consent of their parents or guardians (curators) confirmed by the court. If the child to be adopted has a legal guardian (curator)/ (except for a State care institution), his adoption may be effected with the written consent of the guardian/ curator confirmed by the court.

The child’s parents may give their consent for the adoption of the child by a specific person only if that person is a relative.

Having confirmed the parents’ (guardians’, curators’ ) written consent to adoption, the court shall give a ruling in which it shall explicate to the parents (guardians, curators ) the consequences of adoption referred to in Article 3.227 hereof and their right to revoke their consent to adoption.

Within three business days the court shall send a copy of the res judicata order confirming the consent to adoption to the State institution for adoption.

Article 3.213. Revocation of the parents’ consent to adoption

The parents may revoke their consent to adoption before a court judgement is made on the adoption of the child.

The application for the revocation of the consent to adoption must be filed with the State institution for adoption. If the child has already been adopted, the State institution for adoption shall notify the parents of the fact without disclosing the identity of the adopters. If the application is filed before the day scheduled for the court’s consideration of the application for adoption, the State institution for adoption shall notify the respective court of the revocation of the consent and refer the application for the revocation of the consent for the consideration of the court that confirmed the consent. The examination of the application for adoption shall be put on hold until the issue of the revocation of the consent is resolved.

The court shall not approve of the revocation of the consent to adoption if a year has elapsed since the limitation of the parental authority, which has not been lifted, or if the court ascertains that the parents try to revoke their consent to adoption only for material gain.

Article 3.214. Adoption without the consent of the parents

The consent of the parents of the child to be adopted shall not be required, if the identity of the parents is not known or if they are dead or if the parents’ authority has been restricted for an unlimited period or if the parents are legally incapable or declared dead.

Article 3.215. The consent of the child to be adopted

Where the child to be adopted has already reached the age of 10, the child’s consent to the adoption shall be required. The child shall file his or her consent with the court; adoption without such a consent shall not be permitted.

Where the child is under 10, he must be heard by the court if he or she is capable of expressing his or her views. In taking the decision, the court shall take account of the child’s wishes if those wishes are not contrary to the child’s interests.

Article 3.216. The consent of the adopter’s spouse

Where a child is adopted by one of the spouses, the written consent of the other spouse shall be required.

The consent of the other spouse shall not be required if the spouses are legally separated by a court judgement or if the other spouse has been declared by the court missing or legally incapable.

Article 3.217. Verification of the readiness for adoption

Certified social workers of the State institution for adoption shall ascertain if there are any bars referred to in Book Three hereof for the prospective adoptive parents to adopt the child, investigate their living conditions, collect information on the status of their health and submit a conclusion on the preparedness of the prospective adopters to adopt the child. The list of medical contraindications to adoption shall be approved by the Government or an institution authorised by the Government.

If the prospective adoptive parents do not agree with the conclusion of the social worker on their preparedness to adoption, they may appeal against it in court.

The final decision on the suitability of conditions and preparedness for adoption shall be taken by the court examining the application for adoption.

The conclusion on the legal bars and the suitability and preparedness of the prospective adoptive parents for the adoption of a child in another country shall be approved by a ruling of the Regional Court of Vilnius.

Article 3.218. Provision of data on the child to be adopted

The State institution for adoption shall submit to the court data on the origin, development, state of health and family of the child to be adopted.

Before an application for the child’s adoption is submitted to the court, the State institution for adoption shall provide the data on the child offered for adoption to all the persons included in the list of prospective adoptive parents.

Article 3.219. Registration of adoptions

The registration of prospective adoptive parents and children offered for adoption shall be administered by the State institution for adoption; the statutes of the institution for adoption shall be approved by the Government.

Having taken a decision on the unlimited restriction of parental authority or having confirmed a written consent of the parents to the adoption of their child, the court shall send its res judicata order to the State institution for adoption within three business days.

After a year since the temporary restriction of parental authority, the State institution for adoption shall ascertain if the limitation of parental authority has been lifted. If the limitation of parental authority has not been lifted, the child shall be entered in the list of children offered for adoption.

Article 3.220. Examination of applications for adoption

Applications for adoption submitted by citizens of the Republic of Lithuania shall be examined by the district courts of the applicant’s or the child’s domicile in the presence of the applicants and a representative of the public institution for adoption.

Applications for the adoption of a citizen of the Republic of Lithuania residing in the Republic of Lithuania or in another country shall be examined by the Regional Court of Vilnius.

Applications for adoption shall be examined under non-contentious procedure. Within three business days the court shall send the res judicata judgement to the Register Office which registered the birth of the child.

Article 3.221. Confidentiality of adoption

Adoption case shall be heard at the court in a closed hearing.

Until the child attains majority, data on the child’s adoption may not be disclosed without the consent of the adoptive parents.

Information on a child’s adoption may be provided to the child from the age of 14, the child’s former close relatives (according to blood relationship) or to other persons with the leave of the court which examined the suit for adoption provided that the information is required for the considerations of the child’s health or the health of the child’s close relatives or of other persons as well as for other important reasons.

Article 3.222. Transfer of the child to the adoptive family before adoption

At the request of the State institution for adoption or at its own discretion the court may order a probationary period of six to twelve months and transfer the child to be brought up and cared for in the family of the prospective adoptive parents. If the court order is taken to transfer the child to the family of the prospective adoptive parents, the hearing of the adoption case shall be postponed.

The probationary period may be ordered taking into consideration the psychological preparedness of the child and the prospective adoptive parents for adoption, the duration of contact between the child and the prospective adoptive parents before the application for adoption, and other circumstances which may give rise to doubts whether the child can become adapted to the family of the adoptive parents.

After the child is transferred to the family by a court order before adoption, the mutual rights and duties, except those of succession, of the child and the prospective adoptive parents shall be treated as the mutual rights and duties of children and natural parents.

After the adoption of the child, the adoptive parents shall be treated as the child’s parents under the law from the day on which the court order to transfer the child to their family became res judicata. The court shall specify this fact in its judgement.

Article 3.223. Priority for adoption

If there are several persons who wish to adopt one and the same child, the priority shall be determined in the following order:

1) persons adopting their spouse’s children and adopted children;

2) relatives;

3) persons adopting siblings together;

4) spouses.

If the persons who wish to adopt a child are attributable to one and the same category, priority shall be given to the person who was the first to be registered in the list of prospective adoptive parents.

Article 3.224. Adoption where the adopter is a citizen of a foreign country

Provisions of Articles 3.209-3.221 hereof shall be applicable to adopters who are citizens of a foreign country.

In addition to the provisions of Articles 3.209-3.221 hereof, a citizen of a foreign country may adopt a child if:

1) during six months from the registration of the child in the list of children offered for adoption no application has been received from citizens of the Republic of Lithuania to adopt the child or place the child under guardianship or in curatorship;

2) the parents of the family where the child is brought up and maintained present to the court their written consent for the adoption of the child;

3) the guardian (or curator) presents to the court a written consent for the adoption of the child;

The court, having regard to the interests of the child, shall have the right to decide on the adoption of the child without the consent of the parents of the family, guardian/curator.

Where the child is adopted in another country, all the necessary measures must be taken to prevent persons related to the settlement of the child in another country from gaining any unjustified material gain.

In adjudicating on the adoption of a child by a citizen of another country, consideration must be given to the hereditary continuity of the child’s education, the child’s ethnic origin, religious and cultural adherence and mother tongue, as well as the compliance of the legislation of the recipient country with the requirements of the 29 May 1993 Hague Convention on the Protection of Children and Co-operation in the Field of International Adoption.

Article 3.225. Recognition of adoption executed in another country

Adoption executed in another country shall be recognised in the procedure and in accordance with the terms and conditions laid down in international treaties and agreements and Book One hereof.

Article 3.226. Adoption of children who are citizens of a foreign country

Children who are citizens of a foreign country residing in the Republic of Lithuania shall be adopted in the procedure laid down in this Chapter unless provided for otherwise in an international treaty or agreement between the respective foreign country and the Republic of Lithuania.

Applications of foreign citizens for adoption shall be examined by the Regional Court of Vilnius.

CHAPTER XIV

LEGAL CONSEQUENCES OF ADOPTION

Article 3.227. Consequences of adoption

Adoption shall invalidated the mutual personal and property rights and duties of the natural parents and children and their relatives while creating mutual personal and property rights for the adoptive parents, their relatives kindred and the adopted children and their descendants as relatives by blood.

The adoptive parents shall be treated as the child’s parents under the law from the on which court judgement on the adoption became res judicata except for the exception provided for in paragraph 4 of Article 3.222 hereof.

Article 3.228. The name and surname of the adopted child

The adopted child is given the surname of the adoptive parents by a court judgement ; the child’s name may be changed with the consent of the child capable of expressing his or her views.

At the request of the adoptive parents and the adopted child capable of expressing his or her views, the child may be allowed to retain the surname of his or her natural parents.

When there is a dispute between the adoptive parents or the adoptive parents and the adopted child over the change of the child’s surname or name, the dispute shall be resolved by the court taking account of the child’s interests.

PART VI

RIGHTS AND DUTIES OF OTHER MEMBERS OF THE FAMILY

CHAPTER XV

LIVING TOGETHER OF PERSONS NOT LEGALLY MARRIED

(COHABITATION)

Article 3.229. Scope

The provisions of this Chapter shall regulate the relations in property of a man and a woman who, after registering their partnership in the procedure laid down by the law, have been cohabiting at least for a year with the aim of creating family relations without having registered their union as a marriage (cohabitees).

Article 3.230. Assets subject to the legal regime set in this Chapter

The provisions of this Chapter shall regulate the legal regime of the assets referred to in this Chapter provided the assets have been acquired and used jointly by the cohabitees.

The community property of cohabitees shall include:

1) a dwelling house or a flat acquired and used together by cohabitees for their life together;

2) the rental, usufruct or any other right of one of the cohabitees to use the dwelling house or the flat which the cohabitees use for their life together;

3) immovable property related to the dwelling house or flat used and acquired together provided the immovable is used by the cohabitees together;

4) furniture and other household utensils acquired and used together by the cohabitees except for the chattels which the cohabitees use separately.

The provisions of this Chapter shall not be applicable to assets which the cohabitees use for recreation (garden, summer cottage, etc.).

Article 3.231. Legal regime of assets used by the cohabitees together

Where the immovables or the rights to the immovables referred to in Article 3.230 hereof are registered in the name of one of the cohabitees, both cohabitees may require, by submitting a joint application to the public register, the addition of a record to the effect that the cohabitees use these immovables or the rights to these immovable together. The signatures of the cohabitees adduced to such an application must be certified by a notary public.

Cohabitees shall have a right to make an agreement by a notarial deed on how the assets acquired and used together should be divided after their life together ends. Provisions of Articles 3.101-3.108 hereof shall be applicable to such agreements mutatis mutandis.

Article 3.232. Division of assets acquired and used together

At the request of one of the cohabitees the court may divide all the assets, acquired and used by the cohabitees together, after the death of one of the cohabitees or at the end of their life together provided the cohabitees had not made an agreement on the division of assets certified by a notary public.

Article 3.233. Limitations of the right to dispose of the assets used together

Without the written consent of the other cohabitee, a cohabitee shall have no right to sell, donate or alienate in any other way, lease or charge the assets acquired and used together or to encumber the rights to such assets in any other way.

Paragraph 1 of this Article shall not be applicable if a cohabitee is incapable of giving such a consent due to incompetence or the consent of the other cohabitee is unavailable due to other important reasons. In such a case the permission to make a transaction may be granted by the court at the request of the other cohabitee.

Transaction made in violation of the rules set in paragraphs 1 and 2 may be declared null and void in an action brought by the cohabitee who has not given his or her consent to the transaction except in cases where a third party recipient of the assets sold, charged or leased was in good faith. The time limit for bringing an action for the avoidance of such a transaction shall be one year from the day when the cohabitee knew or should have known about the transaction.

Article 3.234. Division of assets used together

To divide assets acquired and used by cohabitees together in cases referred to in Article 3.232 the court shall first establish the assets acquired and used together and the separate assets of each cohabitee. Debts contracted by the cohabitees together and outstanding at the end of their life together shall be deducted from the assets acquired and used together by the cohabitees.

The assets acquired and used together remaining after the deduction of the joint outstanding debts of the cohabitees shall be divided into two equal shares except in cases provided for in this Article.

The court shall have a right to depart from the principle of equal shares if it is just and reasonable to award one of the cohabitees a bigger share of the assets taking account of the interests of their minor children, the duration of their life together, their age, health, financial situation, personal contribution to the community property and other important circumstances.

A dwelling house or a flat may be awarded to the cohabitee who is in greater need of a residence place taking into consideration his or her age, health, financial situation, the interests of his or her minor children and other important circumstances. In such cases the share of this cohabitee in other community assets shall be reduced. Where the value of the dwelling house or the flat exceeds the value of the cohabitee’s share in the assets, he or she must compensated in money to the other cohabitee for the difference in the value.

The dwelling house or the flat which belonged to one of the cohabitees before their life together can be left to the other cohabitee under right of usufruct if he or she has underage children born to the cohabitation or due to health, age or other important reasons does not have his or her own dwelling place.

Assets other than those referred to Article 3.230 hereof acquired and maintained by using the funds of both cohabitees, shall be divided in accordance with the rules of shared community property.

Article 3.235. Right to use a dwelling place

Having regard to the duration of cohabitation, the interests of the minor children of the cohabitees, the age, health, financial situation of the cohabitees and other important circumstances, the court shall have a right to award the use of the rented dwelling place to the cohabitee who is in greater need of the dwelling place.

Having regard to the circumstances of the case, the court may obligate the cohabitee who has been awarded the right to use the rented dwelling place to pay compensation to the other cohabitee for the expenses related to the search for and movement to another dwelling place.

CHAPTER XVI

DUTIES OF OTHER FAMILY MEMBERS RELATED TO MUTUAL

MAINTENANCE

Article 3.236. The duty of an adult brother (sister) to maintain his (her) minor brother (sister)

Circumstances permitting, an adult brother (sister) must maintain his (her) minor sibling who is in need of support and deprived of parents or their maintenance.

Provisions of Section Two Chapter XII of this Book shall be applicable mutatis mutandis to the procedures of maintenance.

Article 3.37. Mutual maintenance of grandchildren and grandparents

Circumstances permitting, adult grandchildren shall maintain their grandparents not fit for work and in need of support.

Circumstances permitting, grandparents shall maintain their minor grandchildren deprived of parents or of their maintenance.

Provisions of Section Two Chapter XII of this Book shall be applicable mutatis mutandis to the procedures of maintenance.

PART VII

GUARDIANSHIP AND CURATORSHIP

CHAPTER XVII

GENERAL PROVISIONS

Article 3.238. Guardianship

Guardianship shall be established with the aim of exercising, protecting and defending the rights and interests of a legally incapable person.

Guardianship of a person subsumes guardianship of the person’s property, but if necessary, an administrator may be designated to manage the person’s property.

Article 3.239. Curatorship

Curatorship shall be established with the aim of protecting and defending the rights and interests of a person of limited active capacity.

Curatorship of a person subsumes curatorship of the person’s property, but if necessary, an administrator may be designated to manage the person’s property.

Article 3.240. Legal position of the guardian or curator

The guardian and the curator shall represent their wards under law and shall defend the rights and interests of legally incapable persons or persons of limited active capacity without any special authorisation.

The guardian shall be entitled to enter into all the necessary transactions in the interests and in behalf of the represented legally incapable ward.

The curator shall give consent for the ward of limited active capacity to enter into a transaction the ward would not be permitted to enter into independently and shall also help the ward of limited competence to exercise his or her other rights and duties as well as protect his or her interests against third parties.

Article 3.241. Institutions of guardianship and curatorship

Institutions of guardianship and curatorship are municipal or regional institutions concerned with the supervision and control of the actions of guardians and curators.

The functions of guardianship and curatorship in respect of the inmates of medical, educational or guardianship (curator) institutions who have been declared legally incapable or of limited active capacity by the court shall be performed by the respective medical educational or guardianship (curator) institution until a permanent guardian or curator is appointed.

Institutions for the guardianship and curatorship of minors shall include the State institution for the protection of the child’s rights and other institutions referred to as such in this Book.

Article 3.242. Designation of a guardian or a curator

Having declared a person legally incapable or of limited active capacity , the court shall designate the person’s guardian or curator without delay.

The guardian or curator of a minor shall be designated in the procedure established by the rules of Chapter XVIII of this Book.

Only a legally capable natural person may be designated a guardian or a curator provided he or she gives a written consent to that effect. While designating a guardian or curator account must be taken of the person’s moral and other qualities, his or her capability of performing the functions of a guardian or curator, relations with the ward, the guardian’s or curator’s preferences and other relevant circumstances.

The provisions of this Article shall not be applicable to cases where the guardian or curator of an legally incapable person or a person of limited active capacity is the medical, educational or guardianship (curatorship) institution in which the ward is placed.

Article 3.243. Performance of the duties of a guardian or a curator

A guardian who is the ward’s parent or any other close relative shall perform his or her functions as a guardian without any remuneration. In other cases the guardian shall be entitled to recover necessary expenses related to his or her duties as a guardian against the assets of the incompetent person. The amount to be recovered and the procedure of recovery shall be established by the court on the application of the guardian.

A curator who is the parent or any other close relative of the person of limited active capacity shall perform these duties without any remuneration. In other cases the curator shall be entitled to recover necessary expenses related to his or her duties as a curator from the assets of the person of limited active capacity. The amount to be recovered and the procedure of recovery shall be established by the court on the application of the curator.

This Article shall not be applicable to cases where the functions of guardianship or curatorship are performed by a medical, educational or guardianship/curatorship institution.

The guardians and curators s of a minor must live together with the minor. After the ward attains the age of 16, the curator may live separately provided the State institution for the protection of the child’s rights gives its consent.

Guardians and curators shall be obliged to notify the institution of guardianship/curatorship of a change in their residence place.

After the circumstances responsible for the declaration of the ward’s legal incapability or limited active capacity disappear , the guardian or curator shall apply to the court for the cancellation of guardianship or curatorship. Institutions of guardianship and curatorship as well as prosecutors shall also have a right to apply to the court for the cancellation of guardianship or curatorship.

Article 3.244. Use of the assets and income of the legally incapable ward or the ward of limited active capacity

The guardian or the curator shall use the assets and the income generated by the assets of the legally incapable ward or the ward of limited active capacity exclusively in the interests of the legally incapable ward or the ward of limited active capacity.

Transactions exceeding five thousand litas shall require a prior leave of the court.

A prior leave of the court shall be required in all cases where the guardian intends to sell, donate or alienate in any other way the immovable assets or property rights of the ward, to lease them, transfer for use without remuneration, charge or encumber in any way the rights to immovable property or property rights, or to make any other transaction which would cause a reduction in the ward’s assets or the property rights of the ward would be assigned transferred or encumbered. These rules shall be applicable also in cases where the curator intends to give his or her consent for the ward of limited active capacity to enter into a similar transaction.

A guardian, curator or their close relatives may not enter into a transaction with the ward, except in cases where assets are donated or transferred to the ward for use without remuneration, provided the transaction is consistent with the interests of the ward.

Article 3.245. Administration of the assets owned by an legally incapable person or person of limited active capacity

In cases where an legally incapable person or a person of limited active capacity has movable or immovable property in need of constant care (an enterprise, land, facility, etc.), the court shall issue an order for the appointment of an administrator of the property. The administrator may be the guardian/curator or any other person. The administrator of the property shall be subject to the rules hereof on the limitation of the actions of the guardian or the curator. .

The powers of the administrator shall come to an end with the end of the guardianship or curatorship , also on the issue of the court order relieving the administrator of the relevant functions.

Article 3.246. Relieving the guardian and curator of their duties

The court may relieve the guardian or curator of a minor of the duties of a guardian or curator if the minor is returned to his or her parents or adoptive parents.

The court may relieve the guardian or curator of a minor of his or her duties if he or she is unable to perform these duties due to his or her illness or the illness of his or her close relatives, his or her financial situation or other important reasons.

If the guardian or curator is negligent in his or her duties, fails to ensure the protection of the rights and interests of the ward, uses his or her rights for personal gain, the court may remove such a guardian or the curator. . If the actions of the guardian or curator cause damage to the legally incapable person or the person of limited active capacity , the guardian or curator shall be obliged to make good the damage. Institutions of guardianship/curatorship shall have the right to apply to the court for the removal of the guardian or curator. .

Article 3.247. End of guardianship curatorship

Guardianship and curatorship shall end when the court judgement declaring the person legally incapable or the end of the limitations of active capacity becomes res judicata.

When a minor attains the age of 14, his or her guardianship comes to an end, while the guardian of the minor becomes a curator without any additional judgement of the court.

Curatorship comes to an end when the minor attains the age of 18 or when the minor acquires full active capacity before the age of 18 in cases provided for by the law.

CHAPTER XVIII

GUARDIANSHIP AND CURATORSHIP OF MINORS

Article 3.248. The purpose and objectives of child guardianship/curatorship

The purpose of child guardianship/curatorship is to ensure the child’s upbringing and care in an environment which would facilitate the child’s growing up, development and progress.

Objectives of child guardianship/curatorship :

1) to appoint for the child a guardian whose duty it will be to take care of the child, bring him up, represent the child and protect his rights and legitimate interests;

2) to provide the child with living conditions which would be adequate for his age, state of health and development level;

3) to prepare the child for independent life in a family and in the society.

The establishment of child guardianship/curatorship shall be governed by the following principles:

1) first consideration must be given to the interests of the child;

2) priority in becoming the child’s guardians (curators) must be accorded to his close relatives, provided this is in the child’s best interests;

3) the child’s guardianship/curatorship in a family;

4) non-separation of siblings, except when this is contrary to the child’s interests.

When child guardianship/curatorship is established or ended, or a guardian is appointed to a child capable of expressing his or her views, the child shall be provided an opportunity to be heard and to influence the decision making.

Article 3.250. Determination and registration of children in need of guardianship/curatorship

Employees of educational, health care, police and other institutions as well as any person in possession of any knowledge of minors deprived of parental care or of the necessity to protect a minor’s rights and interests (cruel treatment of children by their parents, illness, death, departure or disappearance of the parents, failure of the parents to take back their children from educational or health care institutions, etc.) shall be obliged to notify immediately the State institution for the protection of the child’s rights of the child’s district of residence or their own district.

The State institution for the protection of the child’s rights shall be responsible for the determination of children in need of guardianship/curatorship and their registration. The Institution shall place a child under temporary guardianship/curatorship within three days of the receipt of information about the child’s need of guardianship/curatorship.

The heads and other officials of the institutions referred to in paragraph 1 of this Article shall be responsible under law for any misrepresentations, concealment of a child in need of guardianship/curatorship , creating obstacles for the establishment of guardianship/curatorship or any other violations of the rights and interests of the child.

Article 3.251. Establishment of guardianship and curatorship

Guardianship shall be established for children under the age of 14.

Curatorship shall be established for children older than 14.

Article 3.252. Kinds and forms of child guardianship/curatorship

Kinds of child guardianship/curatorship :

1) temporary guardianship/curatorship ;

2) permanent guardianship/curatorship .

Forms of child guardianship/curatorship :

1) family guardianship (curatorship);

2) social family guardianship/curatorship;

3) institutional guardianship/curatorship.

Article 3.253. Temporary child guardianship/curatorship

Temporary child guardianship (curatorship) means care for and upbringing of a child temporarily deprived of parental care, also representation and protection of the child’s legitimate interests in the family, social family or institution. The purpose of temporary child guardianship (curatorship) is to return the child into the child’s natural family.

A child shall be placed under temporary child guardianship/curatorship if the child’s:

1) parents or single parent are missing and attempts are made to trace them (pending the court judgement declaring them missing or dead);

2) parents or single parent are temporarily incapable of taking care of the child because of the parents’ (the father’s or the mother’s) illness, arrest, imposed sentence, or due to other compelling reasons;

3) parents or single parent do not take care of the child, neglect him, do not look after him, do not bring him up properly, use physical or psychological violence thereby endangering the child’s physical, mental, spiritual or moral development and safety (pending the court order separating the child from the parents).

Article 3.255. End of temporary child guardianship/curatorship

Temporary child guardianship (curatorship) shall end when the child:

1) is returned into his family;

2) attains majority or emancipation;

3) permanent guardianship/curatorship is established for him;

4) is adopted;

4) enters into a marriage.

Article 3.256. Permanent child guardianship/curatorship

Permanent child guardianship/curatorship shall be established for children deprived of parental care who, under the existing conditions, are unable to return into their natural family, and their care, upbringing, representation and protection of their rights and legitimate interests are entrusted to another family, social family or guardianship/curatorship institution.

A child shall be placed under permanent guardianship (curatorship) when:

1) both parents or single parent of the child are dead;

2) both parents of the child or his single parent have been declared missing or dead by a court judgement;

3) the child has been separated from the parents in accordance with the procedure established by law;

4) the child’s parents or close relatives are not identified within a 3-month period after the child’s birth;

5) both parents or the single parent of the child are declared legally incapable in accordance with the procedure established by law.

Article 3.258. End of permanent child guardianship/curatorship

Permanent child guardianship/curatorship shall end when the child:

1) attains majority or emancipation;

2) is returned to his or her parents;

3) is adopted;

4) enters into a marriage.

Article 3.259. A child’s guardianship/curatorship in a family

Child guardianship (curatorship) in a family shall involve no more than 5 children placed under guardianship in the environment of a natural family (the total number of children in the family including the parents’ natural children may not exceed 5).

The total number of children may exceed the number specified in paragraph 1 hereof where that is due to keeping siblings together.

When appointing a guardian of the child, priority shall be given to the child’s close relatives provided they have adequate living conditions and do not belong to the persons or the group of persons listed in Article 23 hereof.

Article 3.260. A child’s guardianship in a social family

A child’s guardianship/curatorship in a social family is the form of guardianship where a legal person (social family) has under its guardianship or curatorship 6 or more children (the total number of children in a social family including the parents’ natural children may not exceed 12) in a family environment.

The total number of children may exceed the number specified in paragraph 1 hereof where that is due to keeping siblings together, or the total number of children may be less where one of the children under guardianship/curatorship is disabled.

Child guardianship/curatorship in a social family shall be established by the laws of the Republic of Lithuania, the Social Family Regulations approved by the Government or its authorised institution, and other legal acts.

The wage and other conditions of remuneration for work of the child’s guardian/curator who has set up a social family shall be established based on the laws of the Republic of Lithuania, Government resolutions and other legal acts.

Article 3.261. Child guardianship/curatorship in public and non-governmental guardianship institutions

A child deprived of parental care shall be placed in a public or non-government child guardianship institution where there is no possibility of placing the child under guardianship/curatorship in a family or a social family.

Institutional child guardianship/curatorship shall be established by the laws and other legal acts of the Republic of Lithuania.

A child shall be placed under temporary guardianship/curatorship on the decision (ordinance) of the municipal board (the mayor) at the recommendation of the institution for the protection of the child’s rights as of the day of the registration of the application with the regional (city) local government.

Temporary child guardianship/curatorship shall be organised in accordance with the Regulations of Temporary Child Guardianship/Curatorship approved by the Government of its authorised public institution.

A child shall be placed under permanent guardianship/curatorship on the basis of a court order taken at the application of the regional (city) institution for the protection of the child’s rights or a public prosecutor.

Article 3.264. Designation of a child’s guardian/curator

Where a child is placed under temporary guardianship/curatorship , the child’s guardian/ curator shall be appointed by the decision of the regional (city) municipal board (the mayor) on the recommendation of the institution for the protection of the child’s rights of the respective region (city). Recommendations for the appointment of a guardian may be presented to the institution for the protection of the child’s rights by public or non-government organisations related to the protection of the child’s rights.

The decision (ordinance) of the regional (city) municipal board (the mayor) on the appointment of a guardian for the child’s shall specify: the name of the institution which adopted the decision, the date of the decision, the kind of guardianship the child is placed under, the guardian of the child, the child under guardianship, the place of guardianship, the institution responsible for the protection of assets owned by the child, other important circumstances which affect the guardianship of the child and the establishment thereof.

Where a child is placed under permanent guardianship/curatorship , the guardian/curator of the child shall be appointed by the court order on the application of the institution for the protection of the child’s rights of the region (city).

The guardianship/curatorship of the child shall be established taking into consideration the wish of the child’s dead parents (adoptive parents) expressed in their will regarding the appointment of the child’s guardian/curator provided it is in conformity with Article 3.269 hereof.

Article 3.265. Place of guardianship/curatorship

The place of guardianship/curatorship of the child may be:

1) the guardian’s (curator’s) place of residence;

2) the child’s place of residence;

3) an institution of child guardianship.

Article 3.266. Organising child guardianship/curatorship

The institution for the protection of the child’s rights of the region (city) shall be responsible for organising the placement of a child under guardianship/curatorship .

When organising the placement of a child under guardianship (curatorship ), the regional (city) institution for the protection of the child’s rights of the district (city) municipality shall co-operate with other local authorities and non-government institutions and organisations related to the protection of the child’s rights.

The procedure for organising the guardianship/curatorship of a child pursuant to this Book hereof shall be established by the Regulations for the Organisation of Child Guardianship approved by the Government.

Article 3.267. Supervision of child guardianship/curatorship

The guardianship/curatorship of a child in a family, social family or institution shall be supervised by the regional (city) Child’s Rights Protection Institution.

In supervising child guardianship/curatorship, the regional (city) Child’s Rights Protection Institution shall co-operate with other institutions related to the protection of the child’s rights.

Article 3.268. The procedure for the selection of the guardian/curator for a child

A child’s guardian (curator) shall be selected by taking into consideration his or her personal qualities, state of health, abilities to function as a guardian/(curator) , relations with the child deprived of parental care, and the interests of the child.

The prospective guardian/curator of the child shall file the following documents with the regional (city) Child’s Rights Protection Institution:

1) an application specifying the number of children he or she wishes to assume the guardianship and upbringing of, their age and the kind of guardianship;

2) a health certificate in the format established by the institution authorised by the Government;

3) the written consent of persons over 16 living together with the applicant.

Article 3.269. Persons which may not be appointed guardians (curators) of a child

The following persons may not be appointed guardians (curators) of a child:

1) a person under 21 unless it is a close relative who wishes to assume the guardianship of the child;

4) former adoptive father (adoptive mother) if his (her) parental authority has been restricted because of the adoptive father’s (adoptive mother’s) failure to duly fulfil his (her) duties or if he (she) has been separated from the child;

5) if the person’s authority as the child’s guardian/curator has been terminated on the basis of paragraph 2 Article 3.246 hereof;

6) a person who has a record of convictions for wilful offences;

7) a person of 65 and over, except for a close relative if he or she wishes to assume temporary guardianship of a child under 10 years of age;

8) a person suffering from chronic alcoholism, drug addiction, mental or other diseases included in the list approved by the Government.

Article 3.270. Preparation for child guardianship/curatorship

The child guardian’s (curator’s ) preparation for guardianship/curatorship shall be organised and co-ordinated by regional (city) Child’s Rights Protection Institutions, other organisations and agencies with relevant work experience.

Article 3.271. Duties of a child’s guardian/curator

A child’s guardian/curator shall be obliged to:

1) ensure the child’s physical and mental safety;

2) take care of the child’s health and schooling;

3) educate the child;

4) decide issues related to the child’s interests in co-operation with the interested central and local government institutions;

5) create no obstacles for the child’s contact with his or her biological parents provided this is not detrimental to the child’s interests;

6) maintain contact with the child’s parents, inform the child’s parents and close relatives, if they so request, about the child’s development, health, studies and other important issues;

7) organise the child’s leisure activities, taking into account the child’s age, development level and inclinations;

8) prepare the child for independent life and work in the family, civic society and the State.

Article 3.272. The rights of a child’s guardian/curator

A child’s guardian/curator shall be the child’s statutory representative and shall defend the child’s rights and legitimate interests.

A child’s guardian (curator) shall have the right to demand in court the return of the child from any person who keeps the child unlawfully.

Article 3.273. Liability of a child’s guardian/curator

A child’s guardian/curator shall be held liable under law for the damage inflicted by the child.

A child’s guardian (curator ) shall be held liable under law for failure to fulfil his or her duties or their improper fulfilment

Article 3.274. Maintenance of a child ward

Maintenance of a child under guardianship in a family, social family or non-government guardianship institution shall be regulated by law.

Article 3.275. Management of the child ward’s income

Funds intended for the maintenance of the child under guardianship shall be managed by the child’s guardian/curator exclusively in the interests of the child in accordance with the rules of Book Four hereof on the regulation of asset administration.

Article 3.276. Relations between the child and the child’s guardian (curator )in property

The child under guardianship shall acquire no property rights to the assets of his or her guardian/curator.

A child’s guardian/curator shall acquire no property rights to the assets owned by the child under guardianship.

CHAPTER XIX

GUARDIANSHIP AND CURATORSHIP OF ADULT PERSONS

Article 3.277. Placing under guardianship or curatorship

An adult person declared legally incapable by the court shall be placed under guardianship by a court judgement.

An adult person declared by the court to be of limited active capacity shall be placed under curatorship .

Article 3.278. Monitoring of the guardian’s or the curator’s activities

Guardianship and curatorship institutions shall be obliged to monitor if the guardian/curator fulfils his or her duties properly.

The duties of the guardian/curator related to the administration of the ward’s assets shall be established by the rules of Book Four hereof on the regulation of asset administration.

Article 3.279. Curatorship of a person of Full Active Capacity

At the request of a natural person of full active capacity incapable of exercising his or her rights or of performing his or her duties due to health reasons may be placed under curatorship.

The curator of a person of full active capacity shall be appointed by a court order at the request of the person of full active capacity or on the application of a guardianship/curatorship institution.

A curator may be appointed only with his or her written consent. The competent person and the curator shall conclude an agency agreement or an agreement on the management of assets in trust setting forth the rights and duties of the curator related to the management, use and disposal of the assets of the person of full active capacity.

Curatorship shall be cancelled by a court order at the request of the person of full active capacity.

In cases provided for in this Article, Article 3.244 hereof shall be applicable to the extent in which it is compatible with the agreement concluded between the curator and the person of full active capacity.

City and regional register offices shall register births, acknowledgements and determinations of paternity, divorces, adoptions, changes of names, surnames and nationality, and deaths.

In towns which do not have register offices the heads of local district councils (except for the local district of the municipality centre) shall have the right to register deaths.

Consular Offices of the Republic of Lithuania shall have the right to register the birth, marriage and death of the citizens of the Republic of Lithuania.

Article 3.281. Rules for the registration of civil status acts

Civil status acts shall be registered, restored, changed, supplemented and corrected subject to the Regulations on Civil Registration approved by the Minister of Justice.

Article 3.282. Language of the records of civil status acts

The records of civil status acts shall be made in Lithuanian. The name, surname and place names shall be spelled in accordance with the rules of the Lithuanian language.

Article 3.283. Prohibition to make records of civil status acts for oneself and for one’s relatives

It shall be prohibited to make records of civil status for oneself, one’s spouse, parents, children, and siblings.

Article 3.284. Documents filed for the record of civil status

Making a record of a civil status act requires the presentation of identity documents and the acts to be registered in the register office.

Article 3.285. Making records of civil status acts

Each record of a civil status act shall be legible to the applicants, it shall be signed by the official making the record and stamped with the stamp of the institution registering civil status acts. Applicants for the registration of births, marriages, divorces, changes of names, surnames and nationality and deaths shall be issued respective certificates.

After the primary records are discovered, the restored records of civil status acts shall be destroyed by the decision of the head of the register office.

Article 3.287. Supervision of the legitimacy of records of civil status acts

The legitimacy of records of civil status acts made by register offices and local district authorities shall be supervised by the Ministry of Justice following the procedure established in its regulations.

Article 3.288. Charges for the registration of civil status acts

Registration of civil status acts in register offices as well as correction and modification of the records of such acts shall be subject to a charge in the procedure established by law.

CHAPTER XXI

REGSITRATION OF BIRTHS

Article 3.289. Registration of births

The birth of a child shall be registered with the register office of the child’s residence place or one of the parents’ residence place.

At the request of the parents of the child, the register office shall make the registration of the child’s birth a solemn occasion.

Article 3.290. Notification of births

A birth shall be notified, orally or in writing, by the parents or one of the parents; if the parents are sick, dead or cannot do that for other reasons, the birth shall be notified by relatives, neighbours, the administration of the maternity home where the child was born or the state institution for the protection of the child’s rights.

The birth of a foundling shall be registered on the application of the person who found the child or the state institution for the protection of the child’s rights.

Article 3.291. Time limits for the registration of birth

The birth of a child shall be notified and registered within three months of the date of the child’s birth; in cases of a stillborn baby – within three days from the time of its birth.

An application for the registration of a foundling shall be filed within three days of the moment when the child was found.

Article 3.292. Record of birth

The record of birth shall include the name, surname and nationality of the child as well as data on the child’s parents in accordance with the rules set in Articles 3.139, 3.140, 3.166 and 3.167 hereof.

Where the paternity of the child has not been ascertained, data on the child’s father shall not be entered.

The name and surname of a child whose parents are not known shall be recorded on the instructions of the state institution for the protection of the child’s rights.

The registration of the child’s birth shall be followed by the issuance of the birth certificate.

CHAPTER XXII

REGISTRATION OF THE ACKNOWLEDGEMENT AND DETERMINATION

OF PATERNITY

Article 3.293. Registration of the acknowledgement of paternity

Acknowledgement of paternity shall be registered in the register office of the child’s mother’s residence on the basis of the applications of the child’s mother and father for the confirmation of the acknowledgement of paternity. Where the paternity is acknowledged after the registration of the child’s birth, the acknowledgement of paternity shall be registered in the register office where the child’s birth was registered.

In cases provided for in paragraph 5 Article 3.140 and Article 3.144, the acknowledgement of paternity shall be registered on the presentation of the application for the confirmation of the acknowledgement of paternity approved by the court.

Article 3.294. Registration of paternity affiliation

Paternity affiliation shall be registered in the register office where the child’s birth was registered on the basis of the court order on the determination of paternity.

Article 3.295. Data on the father in the record of the child’s birth

On the basis of the application on the acknowledgement of paternity or the court order on the determination of paternity, the register office shall record data on the child’s father in the record of the child’s birth and shall issue a new birth certificate.

CHAPTER XXIII

REGISTRATION OF ADOPTIONS

Article 3.296. Place of registration of an adoption

Adoption shall be registered in the register office where the child’s register was registered on the basis of the court order on adoption.

Article 3.297. Data in the birth record of an adopted child

Where on the basis of a court judgement the adopted child is given a new name or the surname of the adoptive parents, these data are changed accordingly in the child’s birth record.

In the birth record of the adopted child the data on the child’s parents shall be replaced by the data on the child’s adoptive parents.

Where a child has been adopted only by a man or a woman, the data on the other parent of the child shall be deleted from the record and shall not be replaced by new data.

The change of data in the child’s birth record shall be followed by the issuance of a new birth certificate.

CHAPTER XXIV

REGISTRATION OF MARRIAGES

Article 3.298. Place of registration of marriage

Marriages shall be registered in the register office of the residence of one of the spouses or their parents as well as in the consular posts of the Republic of Lithuania.

Article 3.299. Application for the registration of marriage

Future spouses shall file an application of a standard format with the registration office of the residence of one of them or, at their own discretion, of that of their parents.

In their application future spouses shall confirm that all the conditions for contracting a marriage set forth in Articles 3.12-3.17 have been complied with; each of them shall indicate the number of their previous marriages and the number of their children.

The application for the registration of marriage shall be cancelled if at least one of the applicants fail to appear to register the marriage at the set time or withdraws his or her application.

Article 3.300. Documents to be presented together with the application for the registration of marriage

Together with their application for the registration of marriage, the future spouses shall present their birth certificate and passport or any other identification document.

A divorcee shall also present his or her divorce certificate.

The application of foreign nationals for the registration of marriage shall be accompanied with a document issued by a competent authority of their State confirming that there are no obstacles for the marriage.

Article 3.301. Time of registration of marriage

The marriage shall be registered no sooner than after a month from the day of filing the application for the registration of marriage.

At the request of the future spouses and in the event of important reasons, the head of the register office shall have a right to permit the registration of the marriage earlier than a month after the day of filing the application.

Article 3.302. Public announcement of an application for the registration of marriage

The filing of an application for the registration of marriage shall be publicly announced in the register office no later than two weeks before the registration day.

The announcement shall indicate the names, surnames and birth dates of the future spouses and the date of the registration of the marriage.

Article 3.303. Registration of marriage

Marriages shall be registered in the presence of both the future spouses and two witnesses.

Before the registration of a marriage, the official of the register office shall be obliged to check once more if all the conditions set in Articles 3.12-3.17 for contracting a marriage have been fulfilled.

The making of the marriage record shall be followed by the issuance of a marriage certificate.

The fact of the registration of marriage shall be entered in the passports or any other identity documents of the spouses by indicating the name, surname and birth date of the other spouse, the place and date of the registration of the marriage.

Article 3.304. Registration of religious marriages

Within ten days of the religious marriage the person authorised by the respective religious organisation shall be obliged to present to the local register office a notification of the religious marriage solemnised in the procedure set by the Church (confession).

Having received a notification of a religious marriage, the register office shall make a record of the marriage and issue a marriage certificate in accordance with the rules of paragraphs 2, 3 and 4 Article 3.303 hereof provided the requirements of Articles 3.12-3.17 hereof have been complied with. In such a case the marriage shall be considered to be contracted on the day of its registration in the procedure set by the Church.

If the registration of a marriage in the procedure set by the Church is not notified within the time limit set in paragraph 1 hereof, the marriage shall be held to have been contracted on the day when it was registered in the register office.

CHAPTER XXV

REGSITRATION OF DIVORCE

Article 3.305. Registration place of divorce

Divorce shall be registered in the register office of the district of the court that has rendered the divorce decision.

Article 3.306. Procedure for the registration of divorce

On receiving a court judgement on divorce, the register office shall make a record of divorce, issue divorce certificates to both the former spouses and make a record of divorce in their passports or any other identity document.

Having registered a divorce, the register office shall send a standard notification of the divorce to the register office that registered the marriage, while the latter shall make respective changes in its record of marriage registration.

CHAPTER XXVI

REGISTRATION OF THE CHANGE OF A NAME,

SURNAME OR NATIONALITY

Article 3.307. Procedure for the registration of the change of a name, surname or nationality

The change of a name, surname or nationality shall be registered in the register office of the applicant’s residence with the permission of the Ministry of Justice.

Article 3.308. Making changes in the records of civil status in respect of the change of a name, surname or nationality

If there is a permission of the Ministry of Justice to change a name, surname or nationality, the register office shall make the respective changes in the records of birth, marriage and divorce and shall issue a certificate on the change of the name, surname or nationality and new birth, marriage and divorce certificates.

CHAPTER XXVII

REGISTRATION OF DEATH

Article 3.309. Procedure for the registration of death

Death shall be registered in the offices or one of the offices referred to in Article 3.280 of the residence of the deceased on the basis of the medical certificate of death.

On the basis of a court decision on the assumption of death or on the determination of the fact of death, death shall be registered in the register office of the location of the court which has taken the decision.

Article 3.310. Notification of death

Death shall be registered upon the application of the relatives or neighbours of the deceased or of the owner of the home where the deceased person lived, as well as on the notification by the administration of the medical centre where the person died or the police commissariat.

Article 3.311. Time limit for the registration of death

Death shall be notified and registered within three days of the death or the time when the dead body was discovered.

Article 3.312. Death record

While registering death, the register office referred to in Article 3.280 hereof shall make a death record and issue a death certificate.

CHAPTER XXVIII

RESTORATION, SUPPLEMENTATION OR CORRECTION OF

CIVIL STATUS RECORDS

Article 3.313. Procedure for the restoration, supplementation or correction of civil status records

Civil status records shall be restored, supplemented or corrected by a register office provided the restoration, supplementation or correction has a justified reason and is not disputed by interested parties.

In case of a dispute between the interested parties, civil status records shall be restored, supplemented or corrected by a court decision.

Chapter XXIX

KEEPING CIVIL STATUS RECORDS AND DOCUMENTS ON THEIR CHANGES

The procedure for filing and keeping civil status records and documents on their changes shall be established by the Ministry of Justice in conjunction with the Archives Department of Lithuania.

BOOK FOUR

MATERIAL LAW

PART I

THINGS

CHAPTER I

GENERAL PROVISIONS

Article 4.1 Definition of things

Things are objects of the material world obtained from nature or manufactured.

Article 4.2 Movable and immovable things

Immovable things are things immovable by nature and things movable by nature but considered immovable by law.

Immovable things are parcel of land and things related thereto, which cannot be moved from one place to another without altering their essence and without significantly reducing their value.

Movable things are things that can be moved from one place to another without altering their essence and without significantly reducing their value.

A movable thing incorporated with an immovable thing that has lost its individual characteristics, shall be deemed a part of an immovable thing.

A movable thing that is physically fastened or else attached to an immovable thing, also making part thereof, but without losing its individual characteristics, shall not be considered an immovable thing.

Consistent parts of an immovable thing separated therefrom temporarily maintain their properties of an immovable thing if these parts are to be restored thereto.

Rules established for immovable things may be applied to movable things and vice versa, provided this is established by law or by agreement between parties on condition such agreement does not contradict the law.

Article 4.3 Fungible and non- fungible things

Fungible things are those for which only the properties of the kind are taken into consideration, which do not possess individual characteristics.

Non-fungible things are those that possess individual characteristics.

Article 4.4. Things with individual characteristics and things with properties of a kind

Things shall be deemed to have individual characteristics when they are distinguishable from other things of the same kind by some characteristics or other.

Things shall be considered to have properties of a kind when they have characteristics common to a kind of things.

Article 4.5. Consumable and non-consumable things

Consumable things are such as once used according to their destination are immediately destroyed, lost or undergo an essential change.

Non- consumable things are such as once used according to their destination remain without essential changes in terms of their value and purpose for a long time.

Article 4.6 Divisible and indivisible things

Divisible things are such as may be divided physically without changing their essential properties and where each part thereof may be used as a self-contained unit.

Indivisible things are such as once divided physically change their essence, as well as things divisible by nature that are recognised indivisible by law.

Divisible things by nature may be recognised as indivisible if the parties so agree.

Article 4.7. Things taken out of circulation, things in limited circulation and things remaining in circulation

Each person may own any things provided these are not taken out of circulation or are not in limited circulation.

Things out of circulation shall be the exclusive property of the State.

Things in limited circulation are things with certain properties whose circulation is limited due to safety, health concerns, or other public needs.

Article 4.8. Household things

Household things are all things used in household activities such as movable things, furniture, decorative items, with the exception of book collections (libraries), collections of art works and other valuable collections, as well as items of scientific or historic value.

Article 4.9. Encumbrances of Real Rights

Encumbrances of real rights are obligations related to the thing.

Encumbrances of real rights shall pass on to the new owner together with the thing. When the encumbrances of real rights have to be registered, only the registered encumbrances shall be passed on to the new owner with the thing. In cases established by law or by mutual consent of the persons involved, encumbrances of real rights together with the thing may be transferred on to another person.

When immovable thing is partitioned or joined with another immovable thing, real rights and encumbrances registered in the public register shall remain unless otherwise stipulated by law.

Article 4.10. Thing expenses

Thing expenses fall into common and extraordinary.

Common thing expenses are those necessary for the security of the thing and in order to protect the thing from destruction or marked deterioration.

Extraordinary expenses are such as used for thing melioration or in order to increase income from such thing.

Article 4.11. Things by value

By their value things fall into those with common value, those with special value and those that have a value based on personal considerations.

The common value of a thing shall depend on the usefulness of the thing.

The special value of a thing shall depend on the use that a person obtains possessing, using or disposing of the thing.

The value based on personal considerations shall depend on the qualities that a person attributes to the thing due to his exclusive relationship with the said thing, irrespective of the use that may be usually recovered from the said thing.

SECTION TWO

PRINCIPAL AND AUXILIARY THINGS

Article 4.12. Principal things

Principal things are such as may be an independent objects of legal relationships.

Article 4.13. Auxiliary things

Auxiliary things are such as exist only in conjunction with principal things or belonging to principal things, or otherwise associated thereto.

Article 4.14. Treatment of auxiliary things

Auxiliary things shall be treated in the same way as principal things, unless otherwise provided by law.

When during the process of transferring a principal thing to another owner a dispute arises regarding an auxiliary thing, the auxiliary thing shall be transferred to another owner together with the principal thing, unless proven that the opposite should apply.

Article 4.15. Essential parts of a principal thing

Essential parts of a principal thing are such as are inseparably connected to and incorporated into the principal thing, so that without these the principal thing could not be used according to its essence or would be recognised as incomplete.

Article 4.16. Fruit

Fruit are things which are bound to separate, separate or are separated from the principal thing as the latter matures organically, without damaging the integrity and purpose of the principal thing.

Article 4.17. Output

Output is work- created things that are produced as a result of a manufacturing process that uses principal things.

Article 4.18 Income

Income obtained from a thing is money and other material goods which are obtained by using the principal thing in civilian turnover.

Income may also be all things that may be obtained by using the principal thing in various modes. In this sense, income is not only things as described in paragraph 1 of this Article but also fruit and output.

Article 4.19. Appurtenances

Appurtenances are independent secondary things meant for serving the principal thing, which are constantly linked to the principal thing by their qualities.

The putting together of two or more things does not render one of these things an appurtenance if there are no characteristics described in paragraph 1 hereof.

PART TWO

REAL RIGHTS

CHAPTER III

GENERAL PROVISIONS

Article 4.20. Definition of real rights

Real right is an absolute right that manifests itself by the right of the owner to implement the right of possessing, using, disposing or by some of these rights.

Article 4.21. Legal regime of real rights

A legal regime established for immovable things shall be applied to real rights regarding immovable things, and legal regime established for movable things shall be applied to real rights to movable things, unless otherwise stipulated by law.

CHAPTER IV

POSSESSION

SECTION I

GENERAL PROVISIONS

Article 4.22. Possession

Possession as an independent real right to things which is the basis for acquiring property right according to acquisitive prescription, is the actual holding of a thing with a purpose to have it as one’s own.

Possession is not considered an independent real right to a thing when the actual holder of a thing recognises another person as the possessor or owner.

Article 4.23. Legal and illegal possession

Possession of a thing may be legal and illegal.

Possession of a thing shall be considered legal when the thing is acquired on the same basis as property right. Possession shall be considered legal unless the opposite is proven.

Illegal possession is such as exercised by force, in a clandestine manner, or by violating other legal acts.

Article 4.24. Object of possession

Any thing that may be the subject-matter object of real right shall be a subject-matter object of possession.

SECTION TWO

ACQUISITION AND IMPLEMENTATION OF POSSESSION

Article 4.25. Acquisition of possession

Possession may initiate by taking over a thing, or by transferring on or inheriting the right of possession.

Possession shall initiate by taking over a thing physically, when the person who has taken over may affect the thing as he wishes. Also, by taking over a thing the person must express one’s will to have the thing as one’ own.

A person may possess a thing without a direct or indirect physical contact between himself and the thing.

Article 4.26. Acquisition of possession in good faith and in bad faith

Possession may be acquired in good faith and in bad faith.

Possession shall be deemed in good faith until the opposite is proven.

Possession shall be deemed to be in good faith when the person who takes possession is convinced that nobody has more rights to the thing that he is taking over than himself.

Possession shall be deemed to be in bad faith when the possessor knew or had to know that he had no right to acquire possession of the thing or that another person had more rights to the said thing.

Article 4.27. Acquisition of possession of immovable thing

Possession of immovable thing may initiate by taking over the thing physically and when the person relinquishing the immovable thing indicates that the thing has been relinquished, provided no impediments exist to accede to the thing or to possess it physically in some other way.

Possession of immovable thing shall initiate as of the moment of the registration of possession in public register.

Possession cannot be registered in public register if real right to this thing has already been registered.

Article 4.28. Acquisition of possession of movable thing

Acquisition of possession of movable thing shall start:

1) when the person desiring to acquire the possession of movable thing takes the thing into his hands,

2) when the person desiring to acquire possession of movable thing has started safekeeping the thing or safekeeping is being carried out upon his instruction;

3) when upon the instruction of the person desiring to acquire possession of a thing the latter is given to a person nominated by him;

4) when a thing is placed in a premise owned by the person desiring to acquire possession of the thing,

5) when the person desiring to acquire possession of the thing is given the keys to a premise containing the thing,

8) upon completion of other acts expressing a person’s will to acquire possession of a thing.

Article 4.29. Acquisition of possession through another person

If a person relinquishing the possession of a thing through another person had the intention to relinquish such thing to a concrete person, possession of a thing so relinquished starts also if the person through whom the thing is relinquished would like to acquire the thing for himself or for yet another person.

Article 4.30. Actual possession through another person

The possessor may possess a thing through another person who must obey the instructions of the possessor.

SECTION THREE

PROVISIONS REGARDING THE TERMINATION OF POSSESSION

Article 4.31. Termination of possession

Possession shall be terminated when the possessor relinquishes his as possessor’s rights to the thing, i.e. when he relinquishes the actual possession of a thing or keeping it as his own, and in other cases provided by law.

Relinquishing of possession shall be clearly expressed or implied.

The possessor’s non-use of an immovable thing does not indicate that he relinquishes possession thereof if his wish to relinquish possession may not be implied from other circumstances.

Article 4.32. Termination of possession of movable thing

Possession of movable thing shall terminate upon the possessor’s losing the ability to affect the thing as he wishes, when:

the thing’s possession is taken over by another person, even if in a clandestine manner or by force,

the possessor has lost the thing and fails to find it,

the possessor may not have the thing for other reasons.

Article 4.33. Termination of possession of immovable thing

Possession of immovable thing shall be terminated when the possessor not only loses the ability to affect the thing as he wishes, but when he undertakes no means to restore such ability.

Possession of immovable thing shall terminate when the efforts of the possessor to restore the effect upon the thing have been unsuccessful.

Possession of immovable thing shall terminate as of the moment the registration of possession in the public register is cancelled.

SECTION FOUR

PROTECTION OF POSSESSION

Article 4.34. Protection of possession

Each possessor is entitled to defend his current possession and to retake the possession that has been taken away forcefully.

The possessor may demand remuneration by a court order not only of the protection of possession but also of the losses incurred due to breach of possession.

A possessor in good faith may be remunerated for the expenses incurred due to the holding of possession, with the exception of cases when these are indemnified by the income received from the possession. A possessor in good faith shall also have the right to keep the parts that have been added to meliorate the possession, provided their removal does not cause damage to the possession. If these parts cannot be separated, a possessor in good faith shall have the right to demand compensation for the expenses incurred due to the melioration, but no higher than the increase in the value of the possession.

Article 4.35. Violation of possession

Possession may be violated by taking or attempting at taking the possession or a part thereof, as well as the rights thereto or by impeding the possession. Violation of possession may be expressed by threats that cause real danger to the possession.

Actions coinciding formally with the description given in paragraph 1 of this Article shall not be considered violations of possession provided the person indicated as the violator of possession proves that the possession by the plaintiff has originated from him illegally.

The claim by the person indicated as the violator of the possession that the possession by the plaintiff originated illegally from a third person shall not be considered the reason to recognise that the person indicated as violator of possession has not violated the possession.

Article 4.36. Disputes regarding possession

If a dispute regarding possession arises when two or more persons claim to be the possessors of the same thing and when they furnish facts proving that heir possession continues, the possession of the person that proves that he is the legitimate possessor of a thing shall be defended.

If none of the persons involved in a dispute manage to prove this, the possession by the person that was the first to enter in possession shall be defended.

CHAPTER V

RIGHT OF OWNERSHIP

SECTION ONE

GENERAL PROVISIONS

Article 4.37. Definition of ownership right

Ownership right is the right to manage, possess, use and dispose of a object of ownership right at one’s volition, without violating the laws and the rights and interests of other persons.

The owner shall enjoy the right to pass the entire object of ownership rights or a part thereof to another person, or only specific rights stipulated in paragraph 1 of this Article.

Article 4.38. Object of ownership right

The subject-matter object of ownership right may be things and other property.

Article 4.39. Limitation of ownership right

Right of ownership may be limited by the will of the owner, by law, or by court judgement .

If doubts regarding the limitation of right of ownership arise, it shall be considered in all cases that the right of ownership is not limited.

Article 4.40. Content of the rights of owners of a land parcel

The owner of a land parcel shall have as his ownership the upper layer of the soil of the parcel, the buildings and the appurtenances constructed on the parcel, as well as other immovable things, if the law does not provide otherwise.

The owner of a land parcel shall enjoy such rights to the space above his parcel as do not contradict the law and as necessary for the intended use of the parcel.

The owner of a land parcel shall have ownership right to the topsoil of the parcel and to the minerals in the soil in so far as this does not contradict the law and as is necessary for the intended use of the parcel.

Article 4.41. Content of ownership right of animals

The owner of animals, in realising the ownership right, must follow the laws governing the protection and keeping of animals, and other requirements stipulated by legal acts.

Article 4.42. Right to parts of trees, bushes, and other vegetation of neighbouring parcels and their fruit

The owner of a land parcel shall have the right to cut off and take such roots and branches of trees, bushes, and other vegetation growing in a neighbouring parcel as grow on his parcel, when he has requested in advance the owner of the neighbouring parcel that such removal should be carried out, establishing the timeframe for their removal and seeing the failure to remove them in the timeframe established.

This right shall not pertain to the owner of a land parcel if the roots and branches of trees, shrubs and other vegetation growing in a neighbouring parcel do not impede the cultivation of the land parcel.

In all cases the owner of a land parcel acquires ownership right to fruit received from the branches of trees, shrubs and other vegetation growing on the neighbouring parcel that extend on to his parcel, and to fruit obtained from the stalks, twigs and roots of other plants growing on a neighbouring parcel that extend to his parcel.

Article 4.43. Temporary use of land parcel of another’s ownership for transport

The owner of a land parcel that has lost access to a public road, necessary for the intended use of his land parcel, may demand from the owners or users of neighbouring parcels that these should allow him, for transport purpose, to use their parcels until the obstacle that has interrupted transport, shall be removed. Disputes regarding the direction of a temporary road and the right to use it, if necessary, shall be decided in court.

The owners of neighbouring parcels over which a temporary road is made, shall be compensated for the losses incurred due to the making of the road in advance.

Article 4.44. Impossibility to use temporarily another’s land parcel for transport

The owner of a land parcel which has lost access to a public road, necessary for the intended use of the parcel, may not demand from his neighbours temporary access across their parcels if his own intentional acts have interrupted access from his parcel to the public road.

Article 4.45. Delimitation of land parcel

When the owners of land parcels fail to agree on the disputed limits of their parcels and these are not clear from the existing documents, the parcels shall be delimited by the court on the basis of pertinent documents, the limits of the actual parcels, and other evidence. If the limits cannot be established, each parcel shall be given an equal part of the plot under dispute, but none of the parcel formed in such manner can differ in size from the existing legally established parcel.

The expenses of parcel delimitation shall be borne by both parties in equal parts, unless otherwise provided by agreements governing their mutual relations or established by court.

Article 4.46. Right to immovable things marking the limits of a land parcel

Owners whose parcels are separated by a fence, trees, shrubs, wall or other immovable things that serves both parcels and marks the limits of these parcels, shall have the right to jointly use the objects, if it cannot be established that these objects belong to one specific owner.

The owner that jointly uses immovable things marking the limits of his land parcel, shall have the right to use it according to its purpose in so far as this use does not interfere with the owner of the neighbouring parcel. Expenses related to the maintenance and protection of such objects shall be paid in equal parts, unless decided otherwise.

The owner of one parcel cannot remove or alter the jointly used immovable things marking the limits of the land parcel without the agreement of the other owner.

Other legal relations between the owners of neighbouring land parcels regarding the immovable things marking the limits of the parcels shall be established by provisions of joint ownership.

SECTION TWO

PROVISIONS REGARDING ACQUISITION AND LOSS OF OWNERSHIP RIGHT

Article 4.47. Provisions regarding the acquisition of ownership right

Ownership right may be acquired in the following way:

1) by contract,

2) by inheritance,

3) by appropriating fruit and income,

4) by producing a new thing,

5) by appropriating a owner-less thing,

6) by appropriating wild animals, wild and domestic bees,

7) by appropriating stray and guardian-less domestic animals,

8) by appropriating a find or a treasure,

9) by obtaining, upon compensation, inappropriately kept public cultural values and other items (property),

10) by confiscation or else alienating things (property) as a retribution for violation of the laws,

11) by acquisitive prescription,

12) as else described by law.

Article 4.48. Acquisition of ownership right by transfer

The right of ownership may be transferred to another person only by the owner of a thing or by a person given such powers by the owner.

The new owner acquires such rights and obligations regarding the transferred thing (property) as had the former owner of the thing (property), if the laws and the contract do not stipulate otherwise.

Article 4.49. The moment from which the acquirer of the thing by contract acquires ownership right

1.The acquirer of a thing (property) acquires the ownership right to the thing (property) as of the moment these are transferred to him, provided the laws or the contract does not stipulate otherwise.

2.The right of ownership to an immovable thing by contract is acquired as of the moment established by law.

3.The contract may stipulate that the ownership right shall pass to the acquirer only after the latter shall have carried out a condition established in the contract.

4.Ownership right to a future thing, with the exception of a thing subject to registration, may be transferred by contract in advance.

Article 4.50. Transfer of property to the acquirer

The transfer of a thing gives the acquirer the opportunity to use the thing transferred according to its purpose, with due regard to the condition of the thing and to its legal status.

The transfer is the passing into ownership of a thing to the acquirer, as well as the passing over of a thing, given without the duty to deliver to the destination, to a transport company for delivery to the acquirer and delivery by post to the acquirer, if the laws and the contract do not provide for differently.

Transfer of a bill of lading or another document testifying to the disposal thereof equals to the transfer of the thing.

Article 4.51. Acquisition of things having a special import

Things having a special import to the economy of the Republic of Lithuania, to the public or to national security, or for other reasons (weapons, heavily poisonous substances, etc.) may be acquired only upon special permission. Such things and the order of obtaining permits necessary to acquire them shall be established by law.

Article 4.52. The risk of accidental perish or damage of a transferred thing

The risk of accidental perish or damage of a thing being transferred shall pass to the acquirer at the moment that he acquires the ownership rights, unless otherwise stipulated by law or by contract.

If the transferor misses the deadline to transfer the thing or the acquirer misses the deadline to receive the thing, the risk of accidental perish or damage of the thing shall be upon the party that has missed the deadline, unless otherwise stipulated by law or by contract.

Article 4.53. Ownership right to fruit and income

The fruit borne by a thing and increase in animal stock belong to their owner unless the law or the contract establish otherwise.

The results of economic use of a thing- output or income- belong to the owner of the thing unless the law or the contract establish otherwise.

Article 4.54. Things arising from joining movable things

When movable things which are property of several owners join to form a new thing and there is no possibility to return them to their original state by partitioning them, or if the partitioning is fraught with excessive costs, when the owners have not agreed specifically upon joining the things, the new movable property arising therefrom shall be considered joint property whose parts belong to each of the co-owners in proportion to the value of the property so joined.

If movable things belonging to different owners were joined without the consent and knowledge of one of these (others) and if there is a possibility to partition them and return them to their original state, this shall be done at the expense of the person that joined them.

Article 4.55 Making of a thing from another’s material

A person who has made a new thing from another’s material becomes its owner, if the value of the work is larger than the value of the material and if the person did not and could not know that the material is somebody else’ ownership. In such case the person who has used another’s material shall recompense its value to the owner.

If the value of the material is greater than the value of producing the thing, the owner of the material shall be owner of the thing. He shall have the right to keep the thing and recompense the value of its making, or renounce the thing in favour of the maker and claim compensation from the latter.

Article 4.56. Making of a thing from own and another’s material

A person who has produced a new thing from his own and another’s material shall become the owner of the thing if the value of the work and that of the own material is greater than the value of another’s material and if such person did not and could not know that the material was another’s ownership. In such case the person who made use of another’s material shall repay to the owner the value of the material used.

If the value of another’s material is higher than that of the work and own material, the owner of such material shall be considered the owner of the thing. He shall have the right to keep the thing and to pay for the making and for the other share of the material to the maker or renounce the thing in favour of the maker and claim compensation from the latter.

Article 4.57. Thing without owner

A thing that does not have an owner or whose owner is unknown shall be considered an ownerless thing.

A thing acquired in good faith and legally possessed shall not be considered ownerless when the possessor has not yet acquired the right to such thing by prescription.

Movable ownerless things includes animals and inanimate movable things which have not been anybody’s property or which have been renounced by the owner, or which have been lost or hidden (find), including a treasure trove.

Article 4.58. Acquisition of ownership right to an ownerless thing

An ownerless thing may be given as ownership only to the State or to municipalities by a court judgement, adopted on the basis of an application by a financial, control or municipal institution. The application shall be submitted a year from the day the thing was included in the register, unless the law stipulates otherwise.

The procedure of disclosure of and accounting for an ownerless thing shall be established by the Government.

Ownership of an ownerless thing may not be acquired if this is prohibited by law or if the appropriation of such a thing violates another individual’s right to appropriate the thing (right to a treasure trove etc.).

Movable things which had no owner or which have been relinquished by the owner by a direct statement to the effect or by discarding the thing, become ownership of a person that started possessing them.

Article 4.59. Wild animals

Wild animals in a state of freedom which have been caught or shot as provided by law, become property of the person that caught or shot them, unless the law provides otherwise.

Article 4.60. Wild and domestic bees

A swarm of wild bees shall be considered ownership of a person on whose land parcel it was caught.

The owner of bees shall enjoy the right to pursue a swarm of bees on another person’s territory provided he indemnifies the damage caused by such pursuit.

The owner of a swarm of bees shall lose ownership right thereto if he has not pursued the bees within 24 hours as of the moment the bees were adopted by another person or when the bees have settled on another person’s land.

If a swarm of bees joins the bee hive of another bee keeper, the owner of arriving bees loses ownership thereof.

Article 4.61. Untended and stray domestic animals

1.A person that catches an untended or stray domestic animal shall immediately inform thereof the owner of the animal and restitute such animal to him, or, if he does not know the owner of such animal or his address, shall inform the police or a municipal office within three days of the capture of the animal.

2.Police or municipal institution shall take measures to find the owner of the domestic animal and, in keeping with veterinary rules, during this period shall entrust the animal for keeping and using to its finder or shall entrust it for keeping and using to the nearest person engaged in agriculture and capable of duly tending to the animal, when the finder of the domestic animal does not engage in agriculture or does not have adequate conditions for keeping the animal.

3.If the owner of untended and stray working domestic animals (and their offspring) is found after one month, and that of domestic animals (and their offspring) within two weeks since the day they were given for keeping and using, such animal shall be returned to the owner. The owner shall repay the expenses of keeping the animal to the person that has tended the animal in the meantime, including the profit borne by it.

4.If the owner of the animal is not found in such time, he shall lose the right of ownership to such animal. In such case the animal shall remain, without recompense, to the person who has tended it.

Article 4.62. Finds

A find is a lost thing whose owner is unknown.

A person who has found a find shall restitute it to the owner if such is know. If such person is not known, the finder shall bring the find to the police within a week of the act of finding, and submit it to the police, if he cannot or shall not keep the thing himself.

The finder or the police shall keep the find for six months. Using the find during this period is prohibited. If in this time the owner of the thing is found, the thing is restored to the owner, with prior compensation by the owner of the expenses of keeping the thing and other expenses related thereto. If during the given term the owner is not found, the thing gratuitously becomes ownership of the finder, on condition that the finder agrees to cover the expenses of keeping and other related expenses when the find was stored elsewhere. If the finder does not agree to cover the expenses, the find shall become ownership of the State, gratuitously, while the finder shall be recompensed the expenses related to the find.

Legal acts may establish other legal provisions regarding finds.

Article 4.63. Perishable ownerless goods and finds

When an ownerless find may perish due to long storage or lose a part of its inherent qualities, the police, financial, supervisory or municipal institution shall take measures to sell the thing, when that is possible, while keeping the money received from selling for the person who has lost the thing. When the thing cannot be sold, it shall be destroyed.

If the owner of the thing is found after the thing was sold, the owner shall receive the amount of money recovered for the thing, less the amount for storing, selling and notifying about the find.

When the owner of a perishable find is not found within the term established by paragraph 1 of Article 4.58, the money received from selling such thing shall be transferred to the State as established by law.

If a person who had lost the thing which was sold as perishable, is not found in six months since the day of finding such thing, the money received from selling the thing shall be given to the finder, less the amount used for storage and selling of and notification about the find.

Article 4.64. Compensation for the find

The person who has found a thing and restored it to the owner or submitted it to the police in the order established by law, shall have the right to compensation from the owner of the lost thing for expenses related to the storage of the find and to pass on the recompense and pay for the find. The owner who has lost a thing shall pay the finder a fee of five per cent from the value of the found, if the owner has not promised a higher recompense for the find or if he has not agreed upon a higher pay with the finder.

A fee for finding a thing shall not be paid when the finder has not informed about the find in due time and due order or if he, when asked, concealed the fact of finding.

Article 4.65. Treasure trove

A treasure is money or valuables dug in the ground or otherwise hidden, whose owner cannot be established, mostly because a considerable period of time has passed since the concealment.

A person who has found a treasure trove in his own land or in another thing owned by the person, shall become owner of the finder.

It is prohibited to search for treasure trove in another person’s land or property. A person who violates this rule shall not receive a part of the treasure trove, and the entire treasure trove shall become ownership of the person in whose land or other property the treasure trove was found.

The person who found a treasure trove in another person’s land or other property by chance or with the permission of the owner to look for a treasure trove, shall receive one-fourth of the treasure trove, while three-fourths shall be given to the owner of the land or other property where the treasure trove was found, unless they have agreed otherwise. The agreement shall be made in writing.

If the digging of or search for valuables is part of the job description of the person, such person shall not acquire right of ownership to the treasure trove or a part thereof.

If a treasure trove has a historic, cultural, or archeological value and is appropriated, by law, for public benefit, the persons that have the right to recompense as stipulated in this article, shall be duly recompensed.

Article 4.66. Improper keeping of cultural heritage

When a person keeps improperly a property that has public value due to its historic, artistic or other properties, the public institution whose role is to protect such heritage, shall warn the owner about the improper keeping of such items. If the owner fails to fulfill the requirements, such property may be taken from him following a claim by relevant institution. Such taken things shall become state property. The person shall be recompensed for the value of the things taken, upon establishing such value by agreement between the former owner and the relevant institution, or, in case of a dispute, by court.

In case of urgency, a claim regarding the appropriation of indicated property may be submitted without warning.

Article 4.67. Expropriation of a thing

The State may expropriate a thing from an owner for the benefit of the public good, with due recompense, or without recompense, as a sanction for violation of the law, only in cases and in the order established by law.

SECTION THREE

ACQUISITIVE PRESCRIPTION

Article 4.68. Definition of acquisitive prescription

A physical or juridical person who is not the owner of a thing but as acquired the thing in good faith and has possessed it in good faith, legitimately, openly, continuously as his own an immovable thing for at least ten years, and movable thing for at least three years, when during the entire such period the owner of the thing had the legal possibility to implement his rights to the thing but has not used them once, shall acquire ownership right to such thing.

The fact of acquisition of ownership by acquisitive prescription shall be established by court.

Article 4.69. Things acquired by acquisitive prescription

Such things may be acquired in ownership by acquisitive prescription that may be subject object of private ownership .

Ownership by acquisitive prescription shall not apply to things obtained by force or in a clandestine manner, irrespectively of whether the person who has obtained the thing by force or in a clandestine manner way himself or somebody else seeks to acquire ownership right in this manner.

Acquisitive prescription shall not apply to ownership right to things that are property of the State of a municipality, or things registered on another person’s (not the possessor’s) name.

Article 4.70. Property acquired and possessed in good faith

A person acquiring property by acquisitive prescription must act not only in good faith, that is, by possessing the thing he must be convinced that nobody else has more rights to the thing he is, but he must also remain a possessor in good faith during the entire period of acquired prescription, and even upon acquiring the thing in ownership he must not know about impediments that hinder his acquiring the said ownership, if such impediments existed.

A possession in bad faith of a part of a thing or several parts thereof does not prevent the possessor from acquiring by acquisitive prescription and in good faith other parts thereof.

If the right to possession is acquired through a representative, good faith is required from both the agent and the principal.

Article 4.71. Continuous possession

1.Possession of a thing shall be deemed continuous when a person has possessed the thing uninterruptedly from the moment of acquiring the right of possession to the moment of acquiring the thing by acquisitive prescription.

2.If during the period of acquisitive prescription the possession of a thing passed on to several persons and the possession of each of these persons met the requirements indicated in Article 4.68 of this Code, then the time of possession of these persons shall be calculated together.

3.Acquisitive prescription shall not be interrupted by the loss of a thing without the volition of the possessor, provided the possession was restored within a year.

4.If the owner of the thing to which acquisitive prescription applies did not have a legal opportunity to implement his right to the thing, the counting of acquisitive prescription shall be suspended for the period that such impediment exists.

SECTION FOUR

CO-OWNERSHIP RIGHT

Article 4.72. Definition of common ownership and its subjects

Co-ownership right is the right of two or several owners to possess, use, and dispose of the object of the right of ownership held by them as common.

A co-owner may be any person that can be the subject of property relations.

Article 4.73. Kinds of co-ownership

Common partial ownership is ownership when shares of each co-owner are established in the co-ownership, while common joint ownership right is ownership when such shares are not established.

Common ownership right shall be deemed partial, unless the laws provide otherwise.

When the size of specific shares of each co-owner is not established, it is assumed that these shares are equal.

Article 4.74. Object of common ownership right

Any thing or other property may be the object of co-ownership right, unless otherwise provided by law.

Article 4.75. Implementation of co-ownership rights

The object subject to common partial ownership is possessed, used and disposed of by a common agreement of co-owners. In case of disputes, the order of possession, use or disposal is established by a judicial procedure on the basis of a claim by one of the co-owners.

If a object of common partial ownership was directly possessed, used and disposed of not by all co-owners, then the other co-owners have the right to receive a respective report annually or immediately after they have ceased to directly possess, use and dispose of the property held in common partial ownership.

Article 4.76. Rights and duties of co- owners in possession and maintenance of common partial ownership

Each of the co-owners in proportion to their respective shares shall have the right to the profits obtained from thing (property), shall be accountable to third persons in relation to duties related to a thing (property), held in co-ownership and shall pay expenses related to its maintenance and preservation, taxes, dues and other payments. If one of the co-owners fails to fulfill the obligation to maintain and take care of thing (property), the other co-owners shall have the right to a compensation for losses thus incurred.

Article 4.77. Change of rights of co-owners due to increase of common partial ownership

If a co-owner, in agreement with the other co-owners and in keeping with the rules established by relevant laws, increases the thing owned in common or the value thereof, the share of such co-owner in the common partial ownership and the order of the use of such thing owned in common shall be changed respectively, upon his demand.

If a co-owner increases the thing owned in common or the value thereof without the consent of the other co-owners, he shall acquire the right to that increased part, provided it can be partitioned without causing damage to the entire thing. If the increased part of a thing or its value cannot be partitioned from the main body without causing damage to the thing, the shares of all the co-owners shall increase in proportion to their shares of property held in common.

Article 4.78. The right of a co-owner to transfer or encumbrance the right to his share of the thing held in common partial divided ownership

Each co-owner shall have the right to transfer in possession of, lease or otherwise alienate, mortgage or encumbrance in some other way all or a part of his share held in common partial ownership, with the exception where this Code stipulates otherwise.

Article 4.79. Priority right to buy shares held in co-ownership

Co-owners shall enjoy the right to buy the share in sale of the commonly owned property at a price at which it is sold, and under the same conditions, with the exception of cases when the sale takes the form of a public auction.

The seller of a share commonly owned shall inform the other co-owners in written form about the intention to sell his part to others than the co-owners, indicating the price and other conditions of sale. When a share of an immovable thing commonly owned is sold, such information shall be given through a notary. When the other co-owners renounce their priority right to buy the share or fail to use such right to the immovable thing within one month, and to other thing, within ten days from the day of receipt of such notification, provided the co-owners have not agreed otherwise, the seller shall have the right to sell his share to any person.

If the share is sold in violation of priority right to buy it, the other co-owner shall have the right, within three months, to demand through court, the transfer of buyer’s rights and obligations to him.

The seller and buyer of a share of common property are jointly responsible for the obligations pertaining to the share of the thing on sale, arising from the sale of the thing with regard to the other co-owners.

Article 4.80. Partitioning of common partial divided property

Each co-owner shall have the right to demand that his share should be partitioned from the common partial ownership.

Provided no agreement is reached regarding the mode of partitioning, the thing shall be divided in kind possibly without disproportionate damage to its destination; in other cases, one or several of the co-owners thus partitioned shall receive compensation in money.

A creditor of a co-owner shall have the right to partition the debtor’s share, in order to claim it.

If one of co-owners is incapable of action or under age, in partitioning his share of co-ownership, a tutor (care) institution shall be present.

Article 4.81. The order of use of houses, flats and other immovable things owned in common

Co-owners of a house, flat or other immovable things shall have the right upon common agreement to establish the order for the use of specific parts of isolated spaces of that house, flat or other immovable things , with regard to their respective shares of common partial property.

If the agreement as stipulated in this article is certified by a notary and registered in a public register, it shall be obligatory also to a person that acquires a part of the house, flat or other immovable thing held in common partial ownership at a later time.

Article 4.82. Right of common partial divided ownership to flats and other premises

Owners of flats and other premises shall have common ownership right to commonly used premises of a house, to carrying constructions, mechanical, electrical, sanitary- technical and other equipment of common use.

The owner of a house, flat or other premises shall have no right to transfer his share of the common partial property, as described in paragraph 1 of this Article, or perform other acts due to which that share would be transferred separately from ownership right to the flat or other spaces, with the exception of cases when a part of thing held in common partial ownership, which can be, or will be after restructuring, used as a separate thing, this use being no impediment to the use of flats or other premises according to their destination, is transferred.

Owners of flats and other premises shall pay a proportionate share of expenses of the maintenance and protection of the house, as well as of taxes, dues, and other fees, and shall make regular contributions into the renovation fund of the house.

The rules stipulated in Article 4.79 of this Code shall also apply when owners of flats and other premises of a house sell to other persons their entire share or a part of their proportionate share of the property held by them in common partial ownership (attic, cellar, etc.). If the share on sale of the thing held in common partial ownership is or can be used to meet the needs not of the entire building but of the owners located in a part thereof (separate stairwell/ entrance etc.), without violating the rights of the owners of premises present in that building, then notification shall be made regarding the sale of that part held in common partial ownership to the owners of premises located in that part of the building, and only these latter shall enjoy priority right to buy it.

The share of common partial property owned by the owner of a flat or other premises shall be equal to the proportion between the useful space owned by him and the entire useful space of the building.

Article 4.83. Rights and duties of owners of flats and other premises to use common partial property

Owners (users) of flats and other premises shall have the right to use parts of common use of a dwelling according to their function, on condition such use does not violate the rights and rightful interests of other space owners (users).

Owner of flats and other premises shall also have the right:

1) to take necessary measures without prior consent of other owners (users) in order to prevent damage and eliminate threats to parts of common use, and demand from the other owners of flats and premises compensation for expenses in proportion to the share of these owners in the common partial property.

2) Demand from other owners (users) of flats and other premises that the possession and use of parts of common use of a dwelling should be in correspondence with the rights and rightful interests of other owners (users). The rightful interests of owners of flats and other premises shall include establishing internal rules of a dwelling, due maintenance and care of parts of common use, preparation of a financial and economic plan for the maintenance of a dwelling, accumulation of renovation funds for parts of common use.

Owners (users) of flats and other premises shall possess, duly maintain, repair and otherwise tend to the parts of common use. For the possession of parts of common use of a multi-flat dwelling, owners of flats and other premises shall establish an association of owners of flats and other premises or shall make up an contract on joint activity.

Owners (users) of flats and other premises do not have to pay expenses incurred without their consent and which are not related to compulsory requirements regarding the use and care of buildings established by laws and other legal acts, or when there is no decision by the administrator or by a meeting of owners of flats and other premises as established by Articles 4.84 and 4.85 of this Code.

Owners (users) of flats and other premises shall allow appointed persons to repair and otherwise put in order the mechanical, electric, technical and other equipment of common use that is situated in their flat or other premises.

Owners of flats and other premises shall have the right to income received from parts in common use, in proportion to their share in the common partial divided property.

Article 4.84. Administration of common partial ownership of owners of flats and other premises, when such owners have not formed a condominium or have not made a contract on joint activities (partnership)

When owners of flats and other premises have not established an condominium of owners of flats and other spaces of a living house or have not made a contract on joint activities (partnership), also when an condominium has been liquidated or a contract has terminated, an administrator of parts in common use shall be appointed.

Such administrator shall be appointed by the mayor (board) of a municipality or his (her) representative. The administrator shall administer the property in accordance with Article 4.240 hereof.

The administrator shall act in accordance with regulations endorsed by the mayor (board) of the municipality. Standard regulations on the administration of co-ownership of flats and other spaces shall be approved by the Government or an institution delegated thereby.

The expenses of administration shall be covered by owners of flats and other premises in proportion to their share of property in the common partial ownership.

Administration shall be terminated as established by Article 4.250 hereof, as well as upon registration of the statutes of an condominium of owners of flats and other premises of a living house, or upon making of a contract on joint activities (partnership).

Rules stipulated in Chapter XIV of this Book shall apply, mutatis mutandis, to the activities of the administrator.

Article 4.85. Implementation of right of common partial ownership of owners of flats and other premises

Decisions regarding the possession and use of parts of common use shall be taken by the majority of votes of the owners of flats and other premises, provided the statutes of the association of owners of flats and other premises or the contract on joint activities does not establish otherwise. Each owner of a flat or other premises shall have one vote. If a flat and other premises are owned by several owners, they shall be on common accord represented by one person, which shall have that vote.

Decisions of owners of flats and other premises shall be taken at the meeting of owners of flats and other premises. The agenda of the meeting shall be notified in public two weeks before the meeting takes place.

Meetings of owners of flats and other premises shall be called by the board (chairman) of the company or by a person delegated by parties to the joint activities contract by owners of flats and other premises, or by administrator of flats and other premises held in common partial property.

Decisions by owners of flats and other premises shall be made public and shall be binding to all owners of flats and other premises, as well as to owners who have acquired ownership rights to flats and other premises after such decisions have been taken. Such decisions cannot limit the rights and legitimate interests of owners of flats and other premises and third persons, with the exception of cases established by this Code and other laws.

Decisions of owners of flats and other premises may be taken without convening a meeting, upon written notification about their decision. The manner of voting in writing shall be established by the Government or an institution delegated thereby.

Article 4.86. Rights and duties of co-owners in using and maintaining common joint property

Co-owners shall have equal rights to income obtained from common thing (property), shall respond to third persons according to the obligations related to the thing (property) co-owned, and shall jointly pay expenses arising from the use and maintenance of the thing, as well as taxes, dues and other fees, provided they have not agreed or the law does not establish otherwise.

The right of common joint ownership may arise only in cases established by law.

Article 4.87. Change of rights of co-owners upon increasing common joint property

If a co-owner increases the common thing or its value in keeping with the rules established by law, all co-owners shall have equal rights to the increased thing or its value.

Article 4.88. Right of co-owner to transfer or limit the right to the part held in joint common ownership

A thing (property) which is object of common joint ownership is possessed, used and disposed of only upon agreement by co-owners.

Agreement of co-owners is necessary in order to transfer the immovable thing to the ownership of another person, to rent or to give for use in some other way, to mortgage or otherwise to encumbrance the right to the thing. If a co-owner is under age, permission may be given by his parents, guardians, or bread-winners.

A co-owner shall have no right to transfer to the ownership of another person his share of common joint ownership until that share has not been established in the common thing (property), with the exception of cases where the thing (property) is being inherited, and in other cases established by law.

Article 4.89. Establishing the share of a co-owner in common joint ownership

The share of a co-owner in common joint ownership shall be established upon demand of the co-owner or upon expiration of legal relations of common joint ownership, or when the share of the co-owner is claimed as liability in relation to his personal obligations, if the rest of the property owned by such person is not sufficient to reimburse the claims of the creditors.

The size of the share of a co-owner in common joint ownership shall be established upon agreement among co-owners. In the event of failure to reach such agreement, the court shall decide.

Article 4.90. Partitioning of common joint ownership

Each co-owner shall have the right to partition his share from the common joint ownership.

If a dispute arises regarding the manner of partitioning, upon the claim by an alienating co-owner the thing may be divided in kind, without causing disproportionate damage to its function. In a contrary case, the partitioning co-owner shall receive compensation in money.

The creditor of a co-owner shall have the right to submit a claim regarding the partitioning of the share of a co-owner and such share itself.

Article 4.91. Payment for common joint property

On the basis of contracts made by one of the co-owners, claims can be indemnified from the entire common joint property, if circumstances do not indicate that the contract was made in the personal interest of the person making the contract, and when the law does not establish otherwise.

Damage caused by a crime committed by a co-owner may be paid from the common joint ownership if a court decision rules that the thing making the subject-matter of common joint ownership has been acquired by funds received from criminal activity or that its value has increased due to such funds.

Article 4.92. Common joint ownership right of spouses

The common joint ownership right of spouses shall be established by the rules stipulated in Book Three of this Code

Provided no agreement has been reached on the matter and Book Three of this Code does not stipulate otherwise, common joint ownership of spouses shall also include agricultural implements acquired by the common funds of spouses.

SECTION FIVE

PROTECTION AND DEFENCE OF OWNER’S RIGHTS

Article 4.93. Protection of owner’s rights

The Republic of Lithuania guarantees equal protection of rights of all owners.

Nobody has the right to:

1) take property by force, with the exception of cases established by law;

2) demand that an owner against his own will should join property with that of another owner.

Property may be taken from owner without recompense only by way of court judgment or verdict.

Property may be taken for public needs only upon just recompense.

Article 4.94. Temporary use of a thing against the will of the owner

In cases established by law, for public good it is allowed to make temporary use of a thing against the will of the owner.

The owner shall be indemnified the expenses incurred as well as the damage caused by such temporary use of a thing arising from paragraph one of this Article.

Article 4.95. Owner’s right to vindicate a thing from another’s illegal possession

The owner shall have the right to vindicate his thing from another’s illegal possession.

Article 4.96. Vindication a thing from an acquirer in good faith

If movable thing was acquired upon payment from a person who had no right to transfer this property, and the acquirer did not and could not know this (acquirer in good faith), the owner shall have the right to vindicate the thing from the acquirer only if the thing belongs to the owner or to a person to whom the owner had given it in possession, if the thing was lost or stolen from one of these, or if it stopped being in their possession against their volition. The owner may vindicate the thing within three years from the moment of the loss of the thing.

Immovable thing may not be vindicated from an acquirer in good faith with the exception of cases when the owner had lost such thing due to a crime committed by other persons.

If a thing was acquired without recompense from a person who had no right to transfer its ownership, the owner shall have the right to vindicate the thing in all cases. This rule shall apply to movable as well as immovable things.

This article shall not apply when a thing was sold or otherwise transferred in compliance with a procedure for the enforcement of court judgments..

Article 4.97. Payments in returning a thing illegally possessed

The owner in vindicating a thing as stipulated by Article 4.95 of this Code, shall have the right to demand: from the person who knew or had to know that his possession was illegal (possessor in bad faith), to restitute or recompense all income that such person received or had to receive during the entire period of possession; from an illegal possessor in good faith- all income which such possessor received or had to receive since the time when he found out or had to find out about the possession being illegal or found out about the starting of a civil case regarding the restitution of the thing.

Illegal possessor in bad faith in his turn shall have the right to claim from the owner the necessary expenses related to the thing since the moment the owner receives income from such thing.

Illegal possessor in good faith shall have the right to claim from the owner recompense for all his expenses caused by the thing that have not been covered by income received from the thing.

Illegal possessor in good faith shall have the right to keep the parts that have been added to meliorate the thing, provided these can be partitioned without causing damage to the thing. If the parts added as melioration cannot be partitioned or when the thing was meliorated in a different mode, the illegitimate possessor in good faith shall have the right to claim recompense of expenses arising from such melioration, but not greater than the increase in value of the thing.

Article 4.98. Defence of ownership right from violations unrelated to loss of possession

Owner may claim elimination of all violations to his right, even if unrelated to loss of possession

Article 4.99. Defence of rights of owners of land parcels from possible violations, unrelated to loss of possession

Owner of a land parcel may claim that new constructions should not be built, rebuilt, reconstructed or even maintained unchanged on adjacent land parcels, if a plausible assumption may be made that such construction of new buildings or change of existing ones or even existence and use of unchanged ones will cause negative impermissible impact on his land parcel or if the buildings on his land parcel may lose stability.

Article 4.100. Expropriation of property for public needs

1.A thing or other property belonging to a person as private ownership may be expropriated for public needs only in exclusive cases and only in the order established by law.

2.In cases provided for by paragraph one of this Article the owner of a thing (property) shall be compensated for in money the value of such thing (property) at market prices, and by agreement between parties, by transfer of another thing (property).

3.Disputes on expropriation of property, its value and on losses incurred due to such confiscation shall be decided by court.

4.Ownership right to a movable thing (property) claimed for public needs shall pass to the State as of the moment of payment for such thing (property) to the owner. Ownership right to immovable thing claimed for public needs shall pass to the State since the moment of registering such immovable thing in a public register, however, such thing may be registered in the public register as state property only after payment has been effectuated to the owner of such immovable thing.

Article 4.101. Protection of rights of persons whose land parcels held in their ownership and carrying constructions thereon are claimed for public needs

If a land parcel is claimed for public needs belongs to a person as his ownership and has buildings on it, such person shall be recompensed for the land parcel, as well as for building in construction or already constructed thereon belonging to such person as his property , as well as plants thereon, in money at market prices.

The value of a land parcel, constructions and plants thereon, the terms of their confiscation, and the losses incurred by the owner due to the expropriation thereof shall be established by a contract between the future user of land and the owner of land, buildings and plants, unless otherwise established by law.

Disputes regarding the expropriation of land parcels, constructions and plants thereon, their value and losses incurred by the owner due to such confiscation, shall be decided by court.

Article 4.102. Protection of rights of persons who use land parcels for building purposes without owning them when such land parcels are claimed for public needs

If a land parcel that is used for building purposed without owning such land is claimed for public needs, such persons shall be recompensed for the constructions being built or already erected on such land as their ownership as well as for plants thereon in money at market prices.

The new land user shall pay for all losses incurred by the owner of buildings and plants due to the expropriation of that land parcel, with the exception of losses that arise due to illegal actions by the owner of such buildings and plants.

The value of land, buildings, and plants, the terms of confiscation of land and the losses incurred due to such expropriation shall be established by a contract between the new land user and the owner of the buildings.

Disputes on the value of buildings or plants, the terms of expropriation and the losses incurred due to such expropriation shall be decided by court.

Natural and legal persons that have built, are building or are reconstructing an edifice without a due permit, a duly agreed and approved project or with relevant digressions from the building project, or with obvious violations of normative technical construction specifications, or in possession of a permit issued illegally, shall have no right to use or dispose of such a building (sell, give as gift, lease, etc.)

Persons whose rights and interests are violated in cases described by paragraph one hereof shall have the right to appeal to the court regarding violations of the rules on construction or the issue of construction permits.

The court by its judgment may;

1) demand that the builder during an established period of time duly approve the project, make due changes therein, receive due permit or eliminate other violations related to due formalities of construction specifications;

2) demand that the builder should remodel the construction within an established period of time (pull down a part of the building, reconstruct, etc.);

3) demand that the builder should pull down the building within a given time frame.

If the builder complies with the requirements as stipulated by paragraphs 3.1 and 3.2 of this Article, the institution registering immovable things must register the construction in due form.

If the builder fails to comply with the requirements as stipulated by paragraph 3.1 and 3.2 of this Article, the construction (its part) may be pulled down by a court judgment at the expense of the builder.

Construction materials remaining after the demolition of such buildings are ownership of the builder.

Damage incurred due to violations of the normative construction technical specifications shall be indemnified in the order established by Section Three of Chapter XXII.

Article 4.104. Consequence s of loss of right to use a land parcel

When a contract that gave a person right for indefinite period to use or rent a land parcel is determined null and void by a court decisions due to intentional acts by a user or renter or is terminated due to volitional significant violations of the order of the use of land, a person may transfer constructions being built or existing on such land and held as ownership. If all or some of the buildings (their parts) cannot be transferred, such remaining items shall be demolished or by an agreement between the land owner and the owner of such buildings be transferred to the ownership of the land owner, or with the agreements of the owner of the land may be given to a third person.

Disputes regarding demolition, or translocation or transfer in favour of the owner of land or a third person shall be decided by court.

Article 4.105. Consequences of loss of right to a land parcel

A person who has lost the right to a land parcel by a court judgment shall be recompensed the value of buildings existing on this land and held in his ownership, provided he is not given the right to use such land parcel in another way (by establishing land servitude etc.)

If a transaction whereby the land parcel was used is acknowledged null and void by a court without the fault of the owner of the buildings, such owner shall be recompensed in the order and on terms established by Article 4.102 of this Code and by funds of the land owner.

If a transaction whereby the land parcel was used, is acknowledged null and void by a court judgment due to the fault of the owner of the buildings and without granting him the right to use in some other legal way the land parcel (by establishing servitude etc.), the owner of the buildings may relocate such buildings. When it is impossible to relocate all or some of these buildings(their parts), upon agreements by the owner of the land the items failing translocation may be transferred to a third person to by agreement between the owner of the land parcel and the owner of the buildings bye transferred to the owner of the land, or demolished.

In cases established by paragraph 3 of this article the buildings are relocated or demolished at the expense of their owner, construction materials remaining after the demolition are property of the owner of the buildings, and the owner of the buildings must compensate for all losses incurred due to illegal use and possession of land.

Disputes regarding translocation, demolition or transfer of buildings in favour of the owner of the land parcel or a third person shall be decided by court.

CHAPTER VI

RIGHT OF TRUST

Article 4.106 Definition and purpose of right of trust

The right of trust of property is the right of the trustee to possess, use and dispose of property in the order and under conditions defined by the trustor.

The right of trust is established for personal purposes, for private or public good.

Article 4.107. Subjects of the right of trust

1.The subjects of the right of trust (trustees) in the Republic of Lithuania shall include state or municipal enterprises, offices and organizations, as well as other legal and natural persons.

2.The trustor or several trustors may appoint one or several trustees, as well as establish the procedure of their appointment and replacement.

Article 4.108. Basis for the right of trust

The right of trust may originate from the law, administrative act, contract, will, or court judgment.

Article 4.109. Content of the right of trust

State or municipal enterprises, offices, and organizations possess and use property duly entrusted them by the State or municipality, and dispose of it upon terms and conditions established by their statutes (regulations), as well as legal acts governing the activities of state or municipal enterprises, offices, and organizations, without violating the law and other persons’ rights and interests.

Other legal and natural persons possess and use the property entrusted them by the trustor and dispose of it to the extent and on terms and conditions established in the legislation on trust, contract, will, court judgment or the law.

Article 4.110. Protection of the right of trust

The subject of the right of trust in protecting the property in possession, shall enjoy the rights established by Articles 4.95- 4.99 of this Code.

CHAPTER VII

A SERVITUTE

SECTION ONE

GENERAL PROVISIONS

Article 4.111. Concept of a Servitude

A servitude is a right in respect of an immovable thing of another that is granted for the use of that thing (the servient thing) or a restriction of the right of the owner of that thing in order to ensure a proper utilisation of the thing in favour of which the servitude is established (the dominant thing).

When the subject of the right of ownership of the servient or dominant thing changes, the established servitude remains due.

Article 4.112. Contents of a Servitude

A servitude grants the servitude holder definite rights of use of a definite thing of another or withdraws from the owner of the servient thing definite rights of use of the thing.

If doubts arise regarding the contents of a servitude and when possibilities to determine it precisely are lacking, it shall be presumed to be the least.

If, at the time of the establishment of a servitude or subsequently, the content of the servitude was not definitely determined, it is conditioned by the needs of use of the dominant thing in accordance to its destination.

The establishment of a servitude shall not deny the owner of the servient thing rights of use of the thing constituting the contents of the servitude, provided the exercise of those rights does not interfere with the established servitude.

The owner of the servient or dominant thing has the right to apply to the court and to request to modify the contents of the servitude or to cancel the servitude, provided that the circumstances change essentially or unforeseen circumstances arise whereby it is impossible to exercise the rights granted by a servitude or the exercise becomes very complicated.

Article 4.113. Exercise of Servitude Rights

Rights granted by a servitude shall be exercised in accordance to their intended destination in order to cause the least inconvenience to the owner of the servient thing.

While exercising the rights granted by a servitude, the servitude holder must not violate rights of other owners.

In establishing a servitude, the obligation to build buildings, install plants or perform other works that are necessary for the exercise of servitude rights may be imposed.

Article 4.114. Duty of the Servitude Holder to Maintain the Servient Thing Properly

If, in order to exercise the rights granted by a servitude in a normal way it is necessary to renovate or properly maintain the servient thing in any other way, the servitude holder must carry such tasks in a proper way and on time unless otherwise stipulated in the contract.

In cases when the owner of the servient thing himself also exercises the rights constituting the contents of the servitude, the obligation to properly maintain the servient thing falls on both subjects in proportion for the use of the thing unless otherwise stipulated in the contract.

Article 4.115. Retaining of a Servitude when the Servient Thing is Divided

Where the servient thing is divided, the previously established servitude remains due for all parts of the servient thing except when, at the time of division, the servitude was valid or was established exclusively in respect of a definite part of the servient thing.

Article 4.116. Retaining of a Servitude when the Dominant Thing is Divided

Where the dominant thing is divided, the previously established servitude remains due for all parts of the dominant thing except when, at the time of division, the servitude was valid or was established exclusively in respect of a definite part of the dominant thing.

The division of the dominant thing may not further encumber the servient thing (in case of a servitude of right of way, all owners of the divided dominant thing use the same way in respect of which the servitude was established).

Article 4.117. Servitude of Right of Way

By a servitude of right of way the right to use a footpath, a road for land vehicles and a path to drive cattle may be established.

Article 4.118. Servitude of Right of Way Granting the Right to a Footpath

When a right to use a footpath is granted by a servitude of right of way without determining any additional possibility to use the footpath for any other purposes and without determining any restrictions on its use, it shall be deemed that pedestrians, bicycles without engines and cattle led on a leash may use a footpath.

If in establishing a servitude of right of way that grants the right to a footpath, the width of a path is not stated and it is not possible to define the width following the previous footpath, if such a footpath existed, a footpath of one meter shall be deemed to be used.

Article 4.119. Servitude of Right of Way Granting the Right to Drive Vehicles

When a right to drive vehicles is granted by a servitude of right of way without determining any additional possibility to use the road for any other purposes and without determining any restrictions on its use, it shall be deemed that it is possible to drive various vehicles and to use it as a footpath.

If, when establishing a servitude of right of way that grants the right to drive vehicles, the width of the road is not stated and it is not possible to determine it on following the former road, if such a road existed, it shall be considered that it is possible to use a four-meter road. In cases when it is likely that such a road may be used to drive specialised vehicles of big dimensions, the owner of the land plot in respect of which the servitude of right of way was established granting the right to drive vehicles has no right to plant trees closer than three meters from the sides of the road.

Article 4.120. Servitude of Right of Way Granting the Right to Drive Cattle

When a servitude of right of way grants the right to drive cattle without determining any additional possibility to use it for other purposes and without determining any restrictions on its use, it shall be considered that such a road (path) may only be used to drive cattle and the servitude holder may use it as a footpath.

The right to drive cattle granted by a servitude of right of way does not confer the right to graze cattle by the roadside or on the path and along it.

If, in establishing a servitude of right of way that grants the right to drive cattle, the width of the road (path) is not stated and it is not possible to define the width following the former road (path), if such a road (path) existed, it shall be considered that a road (path) of one meter may be used.

Article 4.121. Determination of the Location and the Direction of the Road (Path)

When a servitude of right of way grants the right to use a footpath, a road for land vehicles or a path to drive cattle without stating the location and the direction of the road (path), it shall be considered that the right to use the existing road (path) is granted, and if such a road does not exist – the former road (path), and if such a road did not exist or it is not possible to determine its location and direction, the owner of the thing chooses the location and the direction of the road (path), if possible, by following the provision that the location to be chosen as far as possible meets the road (path) requirements.

Article 4.122. Servitude of Buildings

A servitude of buildings may be established granting the right to provide support to the dominant building against the servient thing or to provide attachment to it, to infix hooks or other fastenings into the wall (structure) of the servient building and to use them, to construct and erect parts of buildings pending over the servient plot of land or a building, to forbid the owner of the servient plot of land to construct buildings that obstruct the light or the existing view as well as to perform other acts that are not prohibited by laws or to request that the owner of the servient thing refrains from the execution of definite acts.

Article 4.123. Other Servitudes

Servitudes may be established that grant the right to lay down underground or aboveground communications, servitudes to maintain and use them thereof as well as other servitudes.

SECTION TWO

ESTABLISHMENT OF A SERVITUDE

Article 4.124. Grounds and Time for the Establishment of a Servitude

A servitude may be established by laws, transactions and by a court judgement while in cases stipulated by laws – by an administrative act.

Rights and obligations arising from a servitude in respect of subjects become effective only after the registration of the servitude except when the servitude is established by laws.

In establishing servitudes in all cases the will of the owner of the thing to become the dominant thing must be present except when a servitude is established by laws or by a court judgement.

Article 4.125. Establishment of a Servitude by Transactions

Only the owner of the thing to become the dominant thing has the right to establish servitudes by transactions.

Article 4.126. Establishment of a Servitude by a Court Judgement

A servitude is established by a court judgement when owners fail to come to a mutual agreement, whereas without the establishment of a servitude it would be not possible by reasonable expenses to use the thing in accordance to its destination.

The owner or the possessor of the thing may apply to the court on the establishment of a servitude by a court judgement.

Article 4.127. Restrictions on the Establishment of a Servitude

It is allowed to establish a new servitude provided that the formerly established servitude is not violated whereby.

It is allowed to establish a servitude in respect of an immovable thing subject to mortgage only on the consent of all creditors or by a court judgement.

Article 4.128. Things in Respect of which a Servitude May be Established

A servitude may be established in respect of an immovable thing that by its permanent characteristics may ensure a proper usage of the dominant thing for an indefinite period.

Having established the servitude, things becoming servient and dominant need not necessarily have a common border. Above all, due to the established servitude the thing becoming servient by its permanent characteristics should provide the thing becoming dominant the targeted permanent benefit established by the servitude.

If, at the time of the establishment a servitude, a definite part of the thing was not determined in respect of which the servitude is established, it shall be considered that the servitude was established in respect of an entire thing. However, when in accordance with the rights of use granted by the servitude in respect of the servient thing it is possible to use equally well both the entire thing and a part of it and whereby a proper usage of the dominant thing is ensured, the owner of the servient thing has the right to determine part of the thing where rights established by the servitude may be used.

Article 4.129. Compensation of Damages Incurred due to the Establishment of a Servitude

Damages incurred due to the establishment of the servitude are compensated in accordance with the procedure established by laws. The obligation of the owner of the dominant thing to pay a lump sum or instalments to the owner of the servient thing may be established by laws, contracts, a court judgement or an administrative act.

SECTION THREE

EXTINCTION OF A SERVITUDE

Article 4.130. Grounds and Time for the Extinction of a Servitude

A servitude is extinguished:

1) by renunciation;

2) by the union of the qualities of the owner of the servient and the dominant thing in one person;

3) by destruction of the servient and the dominant thing;

4) by deterioration of the condition of the servient thing;

5) through the end of necessity;

6) through prescription.

A servitude may be extinguished only on grounds laid down in paragraph 1 of this Article.

The time of de-registration of the servitude shall be deemed to be the moment of the extinction of the servitude except for cases provided for in paragraphs 1(2) and (3) of this Article.

The owner of the servient or the dominant thing may apply to the Public Register on the extinction of the servitude.

Article 4.131. Renunciation of a Servitude

The owner of the dominant thing may only renounce the existing servitude for the benefit of the owner of the servient thing.

When a servitude grants several rights of use in respect of one and the same thing it is possible to renounce only some of the rights.

When the dominant thing belongs to several owners the renunciation of the servitude becomes effective only upon the joint consent of all persons.

The renunciation of a servitude possessed shall be done in writing.

The owner of the dominant thing must notify the owner of the servient thing about the renunciation of the servitude no later than six months in advance; the owner of the dominant thing must also compensate damages incurred due to the termination of the servitude to the owner of the servient thing.

Article 4.132. Extinction of a Servitude by the Union of the Qualities of the Owner of the Servient and the Dominant Thing in One Person

A servitude extinguishes only when the same person becomes the owner of both the entire dominant and the entire servient thing.

If the same person becomes the owner of only a part of the dominant and the servient thing, the servitude remains in effect for the rest of the thing.

When the servient thing belongs to several persons, a servitude extinguishes only when all owners of the servient thing acquire the dominant thing by ownership rights.

Article 4.133. Extinction of a Servitude when the Dominant and the Servient Thing is Destroyed

A servitude extinguishes when the dominant or the servient thing is lost.

Article 4.134. Extinction of a Servitude when the Condition of the Servient Thing Deteriorates

If the servient thing deteriorates to the extent that it cannot perform functions of the servient thing any longer, the servitude also extinguishes.

The servitude that extinguished due to the deterioration of the servient thing is renewed if the thing regains properties whereby it may again perform functions of the servient thing. In that event, the fact that within the time period when the deteriorated thing could not perform functions of the servient thing the servitude would be extinguished through prescription is of no importance.

The owner of the servient thing and the owner of the dominant thing shall mutually agree on the extinction or renewal of the servitude. In cases of a dispute, the court shall adopt a judgement.

Article 4.135. Extinction of a Servitude through the End of Necessity

When circumstances change to such an extent that the dominant thing may be properly used without using the servient thing, rights of the owner of the servient thing to use this thing are not restricted and the servitude extinguishes upon the agreement of the owner of the servient thing and the owner of the dominant thing.

Failing the agreement between the owner of the servient thing and the owner of the dominant thing, the court adopts a judgement on the extinction of the servitude.

Article 4.136. Extinction of a Servitude through Prescription

A servitude extinguishes through prescription if the person entitled thereto has not voluntary, within a period of ten years, he or through other persons used the rights granted by the servitude.

A time period during which rights granted by a servitude were not used due to force majeure or due to impediments created by the owner or the possessor of the servient thing is not included into the prescriptive period.

If the servitude holder used the rights granted by the servitude within a period of ten years only in respect of a portion of the servient thing, the servitude in respect of the rest of the servient thing terminates.

A servitude may not extinguish through prescription, if only part of rights granted by the servitude were used.

When the time period of prescription elapses, the servitude of right of way granting the right to use a road or a path leading to a cemetery may not extinguish.

A judgement on the extinction of the servitude through prescription is adopted by the court.

Article 4.137. Extinction of a Servitude of Buildings through Prescription

A servitude of buildings extinguishes only when the owner of the dominant thing himself or through other persons failed to use rights granted by the servitude within a time period of ten years and did something to the servient thing that is incompatible with rights granted by the servitude.

Article 4.138. Right of the Servitude Holder to Claim Compensation for Damages

If the owner or the possessor of the servient thing prevents the servitude holder from the exercise of rights granted by the servitude, the servitude holder has the right to claim damages due to this impediment.

Article 4. 139. Protection of Rights of the Owner of the Servient Thing

If the servitude holder fails to exercise the rights of use of the servient thing granted by the servitude properly and violates the rights of the owner of the servient thing thereby, the owner of the servient thing has the right to request the elimination of any violations even those not related to the loss of possession.

In cases when the servitude restricts the right to a portion of the thing, the owner of the servient thing has the right to request the substitution of the portion of the thing in respect of which the right is restricted thereof by another portion of the thing, if such a substitution assists the owner of the servient thing in avoiding too big losses arising from the servitude.

Following the extinction of the servitude, the servitude holder, provided the owner of the servient thing requests so, must restore the thing to its original state that existed before the establishment of the servitude. The servitude holder may not be requested to eliminate alterations of the thing that appeared irrespectively of the existence of the servitude unless the law or the contract provides otherwise.

Article 4.140. Liability in Accordance with Property Obligations arising from a Servitude

If the servient or the dominant thing by rights of ownership belongs to several owners, they are solidarily liable in respect of property obligations arising from the servitude.

If the servient or the dominant thing is transferred to another person, the transferor and the transferee of the thing shall be solidarily liable in respect of property obligations arising from the servitude before the transfer of the thing.

CHAPTER VIII

USUFRUCT

SECTION ONE

GENERAL PROVISIONS

Article 4.141. Concept of the Usufruct

Usufruct is the right (the right of the usufructuary) of use and enjoyment, granted for a period of a person’s life or for a certain period that may not be longer than a lifetime of a person, of a thing of another and of its fruits, products and revenues.

Usufruct may be established for the benefit of one or several persons (either jointly or severally).

Article 4.142. Object of the Usufruct

Each not consumable movable and immovable thing that is the object of the right of ownership may be the object of the usufruct.

By acquiring the usufruct in respect to a principal thing, the usufructuary also acquires the usufruct in respect of secondary things unless the contract or laws provide otherwise.

The object of the usufruct is transferred to the usufructuary pursuant to the inventory.

If the owner of the thing in respect of which the usufruct was established changes, the usufruct remains due.

Article 4.143. Contents of the Usufruct

A usufructuary has the right to use the thing as prescribed, or in the absence of requirements, in accordance to its destination as though he was its diligent owner.

Fruits, products and revenues produced by the thing while exercising the usufruct belong to the usufructuary unless the contract or laws provide otherwise.

The content of the usufruct is established on a case-by-case basis at the establishment of the usufruct. The subject establishing the usufruct may establish only such rights granted by the usufruct that are in compliance with the usage of the thing in accordance to its destination.

If the usufruct is established in respect of the thing that is the object of the right of common ownership, the usufructuary enjoys the same rights of possession and use of the thing as though he were its co-owner.

The usufructuary has the right to request the performance of obligations arising from the object of the usufruct and to accept contributions.

The usufructuary has no right to transfer the usufruct to another person; however, he can transfer the right of use to another person. In that event, both subjects are solidarily liable according to their obligations. The period of time for which the right of use of the usufruct was transferred to another person may be not longer than the time for which the usufruct was established.

The usufructuary has no right to remake the object of the usufruct or to change it in essence in some other way without the permission of the owner of the object of the usufruct or in cases prescribed by the law – without a judgement of the court.

The usufructuary has no rights in respect of the treasure found in the object of the usufruct or a part thereof that, pursuant to the law, belongs to the owner of the thing.

Article 4.144. Duties of the Usufructuary

The usufructuary is bound to maintain and renovate the object of the usufruct so far as it is necessary to ensure its normal condition.

In proportion to the possessed rights of use of the object of the usufruct and the revenues produced by it, the usufructuary is bound to pay taxes and other fees in respect of the object of the usufuct unless the contract and laws provide otherwise.

If the object of the usufruct is damaged or broken or it is necessary to perform routine improvement and repair works, to protect it from unforeseen risks or when third persons raise claims in respect thereto, the usufructuary must without delay notify the owner.

The usufructuary in cases specified in the contract, the will or the law is bound to insure the object of the usufruct. If the usufructuary fails to insure the object of the usufruct, the owner thereof may insure it at the expense of the usufructuary.

The usufructuary annually at his own expense is bound to render to the owner of the object of the usufruct a report unless otherwise provided in the usufruct terms.

Article 4.145. Use of the Usufruct in Respect of Land

The usufruactuary has no right to fell trees on the land subject to the usufruct except those which have fallen and died naturally. The usufructuary must replace the destroyed trees unless otherwise provided by the usufruct terms.

The usufructuary may not extract minerals from the land except when the extraction of minerals constitutes the purpose for the land use.

Article 4.146. Liability of the Usufructuary

The usufructuary is liable for the deterioration of the condition of the object of the usufruct due to improper use of the usufruct.

If the usufructuary fails to perform principal duties arising from the usufruct, the court on the request of the owner of the object of the usufruct can appoint the administrator of the object of the usufruct.

SECTION TWO

ESTABLISHMENT OF THE USUFRUCT

Article 4. 147. Grounds and Time for the Establishment of the Usufruct

Usufruct may be established by laws, court judgements – in the cases prescribed by laws, and by transactions.

Rights arising from the usufruct in respect of the thing that must be legally registered and duties in respect of subjects arise only after the registration of the usufruct except when the usufruct is established by law.

Usufruct is opened in respect of a movable thing that is not subject to obligatory legal registration from the time of a transfer of the thing unless otherwise provided by the law (when the usufruct is established by law), by a transaction (when the usufruct is established by a transaction), or by a court judgement (when the usufruct is established by a court judgement).

At the establishment of the usufruct, the will of the person who will become the usufructuary shall be present except when the usufruct is established by law.

Article 4.148. Establishment of the Usufruct by Transactions

Only the owner of the thing himself has the right to establish the usufruct by transactions.

Article 4.149. Restrictions on the Establishment of the Usufruct

A new usufruct may be established upon things that have already had the usufruct established upon them provided the rights granted by a newly established usufruct do not coincide with the rights previously established by the usufruct and the implementation of rights granted by a new usufruct will not infringe the rights of the existing usufruct.

SECTION THREE

EXTINCTION OF USUFRUCT

Article 4.150. Grounds and Time for the Extinction of Usufruct

Usufruct is extinguished:

1) by renunciation;

2) by the death of the usufructuary, by the dissolution of the legal person or by expiry of a term of thirty years from the establishment of the usufruct in respect of the legal person;

3) by expiry of a time period or when a legal fact laid down in the resolutory condition becomes effective;

4) when the usufructuary becomes the owner of the thing subject to usufruct;

5) by destruction of the object of the usufruct;

6) by deterioration of the condition of the thing subject to usufruct;

7) through prescription;

8) by extinguishing the usufruct by a court judgement.

Usufruct may be extinguished only on the grounds laid down in paragraph 1 of this Article.

Time of extinction of the usufruct is the moment of it’s de-registration except for cases laid down in subparagraphs 2, 3, 4 and 5 of paragraph 1 of this Article and when the usufruct need not be registered.

The usufruct created for the benefit of several usufructuaries extinguishes by the extinction of the right of the last person unless provided otherwise.

When the usufructuary on the grounds of serious reasons cannot perform his duties, the usufruct may be converted to an annuity upon a mutual agreement of the owner of the object of the usufruct and the usufructuary or by a court judgement.

Article 4.151. Renunciation of the Usufruct

The usufructuary may renounce the possessed usufruct only in favour of the owner of the object of the usufruct.

When the usufruct grants several rights of use in respect of the same thing, some of rights may be renounced.

The renunciation of the possessed usufruct shall be done in writing.

Article 4.152. Extinction of the Usufruct by the Death of the Usufructuary, by the Dissolution of the Legal Person or by the Expiry of a Term of Thirty Years from the Establishment of the Usufruct in Respect of the Legal Person

When the usufructuary dies, the usufruct extinguishes irrespective whether it was established for a fixed period or a lifetime of a definite person. When the usufruct extinguishes at the death of the usufructuary, assignees are bound to return the thing to the owner.

The thing owned by the legal person in the capacity of the usufructuary must be returned to the owner following the decision to liquidate the legal person or after the expiry of thirty years from the establishment of the usufruct in respect of the legal person.

Article 4.153. Extinction of the Usufruct by the Expiry of a Time Period or when a Legal Fact Laid Down in the Resolutory Condition Becomes Effective

If at the time of the establishment of the usufruct its extinction date was specified or the termination of the usufruct was related to the resolutory condition, then, at the time of the expiry of the fixed time period or when the resolutory condition becomes effective, the usufruct terminates.

If the usufruct was granted until a third person reaches a certain age, it continues until the date he would have reached that age, even if he has died.

If the usufruct was granted until conditions related to a third person appear, the usufructuary retains his rights till the end of his life, even if the third person dies before the appearance of the conditions and therefore the conditions foreseen can not appear.

Article 4.154. Extinction of the Usufruct when the Usufructuary Becomes the Owner of the Object of the Usufruct

When the usufructuary becomes the owner of the object of the usufruct, the usufruct extinguishes.

If the usufructuary becomes the owner of only a part of the object of the usufruct, the usufruct remains in respect of the rest of the thing.

Article 4.155. Extinction of the Usufruct by Destruction of the Object of the Usufruct

When the object of the usufruct is destroyed, the usufruct is extinguished.

Article 4.156. Termination Extinction of the Usufruct when the Condition of the Object of the Usufruct Deteriorates

When the condition of the object of the usufruct deteriorates to such an extent that it cannot be used any longer in accordance to its destination, the usufruct extinguishes.

The usufruct that extinguished due to the deteriorated condition of the thing is renewed if the object of the usufruct regains properties whereby it can again perform functions of the object of the usufruct. In that event, the fact that within the time period during which the deteriorated object of the usufruct could not be used in accordance to its destination, the usufruct could have been terminated through prescription, is of no importance.

A decision on the extinction and the renewal of the usufruct is adopted upon a mutual agreement of the owner of the object of the usufruct and the usufructuary, and failing the agreement – by the court.

Article 4.157. Extinction of the Usufruct through Prescription

The usufruct created in respect of an immovable thing extinguishes through prescription if the usufructuary continuously voluntary within ten years himself or through other persons did not use rights granted by the usufruct.

The usufruct created in respect of a movable thing t extinguishes through prescription if the usufructuary continuously voluntary within three years himself or through other persons did not use rights granted by the usufruct.

A time period during which the rights granted by the usufruct were not used due to forcemajeure or the impediment of the owner (possessor) of the object of the usufruct is not included into the prescriptive period.

If the usufructuary used rights granted by the usufruct for 15 years only by using a part of an immovable thing, the usufruct extinguishes for the rest of the thing.

The usufruct may not extinguish through prescription if only a part of rights granted by the usufruct were used.

Article 4.158. Return of the Object of the Usufruct following the Extinction of the Usufruct

At the end of the usufruct, the usufructuary is bound to return to the owner of the object of the usufruct the thing in the same condition as he received it taking into account regular appreciation unless otherwise agreed at the time of the establishment of the usufruct.

The usufructuary has the right to retain parts used for the improvement of the thing, if they can be separated, and if the object of the usufruct whereby is not damaged. If the improved parts cannot be separated or the thing was improved in any other way, the usufructuary has the right to claim the reimbursement of improvement costs but no more than the increase of the value of the thing only on condition that he improved the thing upon the consent of the owner of the thing.

Article 4.159. Protection of Rights of the Owner of the Object of the Usufruct

If the usufructuary fails to use rights granted by the usufruct properly and thus violates the rights of the owner of the thing, the owner of the thing subject to usufruct has the right to request the elimination of any violations even those not related to the loss of the possession.

CHAPTER IX

RIGHT OF SUPERFICIES

Article 4.160. Concept of the Right of Superficies

The right of superficies is the right to use the land of another for constructing buildings or to acquire and possess the land by the ownership right or by the right to use the subsoil.

The right of superficies may be granted regardless of other real rights of the would-be holder of the right of superficies or the granting of the right can depend on another real right or the lease of an immovable thing.

When the owner of the land, buildings or plants changes, the right of superficies remains due.

Article 4.161. Retribution

The act establishing the right of superficies may stipulate that the superficiary is to pay to the owner of the land a lump sum or to pay by instalments.

Article 4.162. Contents of the Right of Superficies

The superficiary is entitled to acquire or to own buildings and perennial plants on the land owned by another by right of ownership.

In determining the right of superficies, the right of the superficiary to construct, use or demolish buildings or to plant plants or destroy them may be limited.

The right of superficies may be established for a fixed period or for an indefinite period.

Article 4.163. Establishment of the Right of Superficies

The right of superficies is established by the agreement of the landowner and the person becoming the superficiary or by the will of the landowner.

Article 4.164. Extinction of Superficies

Superficies is extinguished:

1) by the union of qualities of the superficiary and the owner of the land in one person;

2) by the expiry of the term;

3) through prescription, if the superficiary fails to use the object of the right of superficies for ten years;

4) when for more than two years the superficiary is in default of paying the fee specified in the act establishing the right of superficies.

At the extinction of superficies, the ownership right to buildings or plants is transferred to the landowner. The landowner shall reimburse their value provided this has been specified in the act establishing superficies.

The superficiary may remove buildings or plants, if he returns the land to its former condition and if the act establishing superficies does not provide otherwise.

The destruction of buildings or plants is not the grounds for the extinction of superficies, unless the parties have agreed otherwise.

CHAPTER X

EMPHYTEUSIS

Article 4. 165. Concept of Emphyteusis

Emphyteusis is a real right to use the plot of land or other immovable of another provided the emphyteutic lessee does not aggravate its quality, does not undertake to construct buildings, to plant perennial plants and perform other works thereon that durably increase its value both of the land used or any other immovable thing except upon the permission of the owner of the land.

Emphyteusis may be established for a fixed or an indefinite period. The term of emphyteusis may not be less than ten years.

When the owner or the emphyteutic lessee changes, emphyteusis remains due, provided assignees use the leased thing properly and fulfil other obligations stipulated in the act constituting emphyteusis.

Article 4.166. Emphyteutic Canon

The act constituting emphyteusis may stipulate that the lessee is to pay the owner of an immovable thing a lump sum or to pay by instalments.

Article 4.167. Establishment of Emphyteusis

Emphyteusis is established by agreement between the owner of an immovable thing and the emphyteutic lessee or by will.

Article 4.168. Contents of Emphyteusis

Unless the act constituting emphyteusis provides otherwise, the lessee shall use the leased immovable thing as its owner, however he shall not increase its value essentially, he also is not entitled to change its destination without the permission of the owner. If emphyteusis is established in respect of land, the act constituting emphyteusis may stipulate the right of the lessee to build buildings or plant plants necessary for the use of the land in accordance with its destination.

The emhyteutic lessee is bound to preserve and repair the immovable at his own expense.

Unless provided otherwise, the emhyteutic lessee enjoys the fruits produced by an immovable thing.

The act constituting emphyteusis may stipulate that the emhyteutic lessee is not entitled to assign his rights to another person or divide emphyteusis without the consent of the owner.

Unless the act constituting emphyteusis provides otherwise, the emhyteutic lessee has the right to sublease. The sublessee shall not have more rights than the emhyteutic lessee. The sublease terminates upon the end of emphyteusis.

Article 4.169. Extinction of Emphyteusis

Emphyteusis is extinguished:

1) by the expiry of the term;

2) by the loss of the object of emphyteusis;

3) by the extinction of emphyteusis by a court judgement;

4) by the union of the qualities of owner and emphyteutic lessee in the same person;

5) by non-user for ten years;

6) by a mutual agreement of parties.

On the initiative of the owner and the emhyteutic lessee grounds for premature extinction of the emphyteusis may be stipulated in the act constituting emphyteusis.

Emphyteusis may be modified or cancelled by a court judgement on the request of either the owner or the emphyteutic lessee, provided that unforeseen circumstances appear whereby it is impossible to use the thing in conformity with to earlier conditions.

Upon the extinction of emphyteusis, the emphyteutic lessee is bound to return to the owner the object of emphyteusis. The emphyteutic lessee is to be reimbursed for the value of the improvements of the object of emphyteusis, provided that the improvements have been made upon the consent of the owner. The emphyteutic lessee is entitled to suspend the transfer of the object of emphyteusis till the time when the owner repays the compensation. The owner can retain the thing belonging to the emphyteutic lessee till the time the lessee settles accounts with him.

If the act constituting emphyteusis stipulated the right of the emphyteutic lessee to construct buildings or plant plants necessary for the use of the land in accordance to its destination, at the extinction of emphyteusis, the emphyteutic lessee can remove buildings or plants, if he returns the land to its former condition and unless the act constituting emphyteusis provides otherwise.

CHAPTER XI

MORTGAGE

SECTION ONE

GENERAL PROVISIONS

Article 4.170. Concept of Mortgage

Mortgage is the pledge of an immovable thing to secure the performance of a present or future debt obligation, when the mortgaged thing is not transferred to the creditor.

An agreement on the conveyance of the mortgaged thing or the thing to be mortgaged to the creditor is not valid.

The mortgage does not deprive the owner of a thing the right to possess, use and dispose of the mortgaged thing with due consideration of the rights of the mortgagee. A subsequent pledge of the mortgaged thing is allowed if the mortgage bond does not provide otherwise.

Article 4.171. Object of Mortgage

The object of a mortgage may be individual immovable things, registered in the public register and not withdrawn from the civil turnover that may be submitted for a public forced auction. The mortgage of an immovable thing does not cover the proceedings received from this thing.

When a principal thing is mortgaged, it shall be deemed that all present and future accessories added to the principle thing by the will of the owner or due to natural events are mortgaged.

When an immovable thing is pledged for the use of which in accordance with its destination movable things are necessary, it shall be deemed that movable things necessary for the use of such a thing in accordance with its destination are the object of the mortgage, including those that will come into the ownership of the mortgagor in the future unless otherwise provided in the mortgage contract on the pledge (non-pledge) of movable things or in the unilateral mortgage declaration of the owner of an immovable thing.

Only an insured thing may be mortgaged with the exception of land.

The mortgage of an immovable thing covers the insurance indemnity of the thing.

In order to mortgage a part of the thing owned by the same owner, the part thereof must be accurately defined and registered in the public register as a separate entity.

For the mortgage of buildings, the plot of land on which buildings are standing is to be mortgaged or the mortgage shall include right of lease (right of use) in respect of the plot of land thereof.

A thing belonging by the right of common ownership may be mortgaged only on the consent of all co-owners. When a part of common divided ownership is mortgaged, the consent of other co-owners is not necessary, however, the mortgaged part must be accurately defined in the contract on the manner of the use of the thing concluded among co-owners and certified by the notary.

The mortgage of the thing does not prevent from the transfer of the thing to the ownership of another. With the transfer of the mortgaged thing for the ownership of another person, the mortgage follows the thing.

The owner of the mortgaged thing has no right to destroy, damage or reduce the value of the thing, except for normal depreciation or the decrease of the value pertaining to its use for the purpose of essential necessity. When the requirements thereof are violated, the mortgagee may demand the commencement of the execution against the mortgaged thing before the expiration of the term.

As the object of a legal mortgage such thing shall be selected that having sold it all creditor’s claims are satisfied and the debtor should be affected the least.

The mortgage of land extends to buildings as appurtenances unless the mortgage contract provides otherwise. If the mortgage of land does not extend to buildings, after the foreclosure sale of the mortgaged land, the owner of buildings shall acquire the right of the servitude of land. When the mortgaged plot of land with buildings on it belonging to another person (not the owner of the land) by right of ownership is sold in a foreclosure sale, the rights and duties of the former owner of the land possessed by the owner of buildings are passed to the person who acquires the land in a foreclosure sale.

Article 4.172. Validity of the Mortgage after Dividing the Mortgaged Immovable Thing

After the division of the mortgaged immovable thing, the mortgage claim is not divided and remains valid for all immovable things resulting after the division. An agreement on the division of the mortgage claim is not be valid.

The priority in a forced auction sale of immovable things belonging to different owners by right of ownership resulting after the division of an immovable thing is established at the time of division by a written consent of the owners of the thing. In the absence of a written consent of the owners of the thing, the priority in a foreclosure sale of immovable things resulting after the division is established by the mortgage judge.

Article 4.173. Validity of the Mortgage after Joining Together Mortgaged Immovable Things

Mortgaged immovable things may be joined only subject to a written consent of the creditors; the priority of the satisfaction of whose claims will change after the joining.

After joining together several immovable things, the mortgage on each of them extends to the immovable thing resulting after the joining. The priority of satisfaction of claims of mortgage creditors is established in accordance with the date of filing an application for registration of the mortgage.

Article 4.174. Satisfactions and Recoveries Secured by the Mortgage

The mortgage secures the satisfaction of the principal claim, the recovery of the interest arising from the claim and the forfeit and costs of the proceedings related to the implementation of the mortgage.

The principal claim secured by the mortgage, the interest arising from this claim and the forfeit may be increased, and the term for the satisfaction of the debt obligation may be reduced or extended as compared to subsequent creditors only upon the receipt of a written consent of subsequent creditors.

Article 4.175. Types of Mortgage

Legal and contractual mortgage may be registered. The procedure for the establishment of legal mortgage is defined by the Code of Civil Procedure.

Legal mortgage shall arise on the basis of the law or a court judgement in the following cases:

1) to secure state claims arising from taxing and state social insurance legal relations;

2) to secure claims related to the construction of buildings or reconstruction;

3) to secure property claims in accordance with a court judgement;

4) in other cases provided for by this Code.

Legal mortgage may be ordinary, joint, the mortgage of the thing of another, maximum, common and conditional mortgage.

To secure state claims arising from taxing and state social insurance legal relations, the mortgage is established on the request of the State Tax Inspectorate or the State Social Insurance Institution. The application shall indicate the thing in respect of which the mortgage is established, the owner of the thing who is a debtor, the grounds for the establishment of the mortgage, the term of mortgage and the amount of the claim. Documents certifying data provided in the application shall accompany the application.

Article 4. 177. Establishment of Mortgage to Secure Claims Related to the Construction of Buildings or Reconstruction

The mortgage to secure persons’ claims related to the construction of buildings or reconstruction may be established only in respect to a registered building.

The mortgage is established on the request of the contractor, designer, the supplier of materials or the person who provides the funding not later than thirty days following the completion of construction or reconstruction works. The application shall indicate the building in respect of which the mortgage is established, the owner of the thing who is a debtor, the grounds for the establishment of the mortgage, the term of mortgage and the amount of the claim. Documents certifying data provided in the application shall accompany the application.

Article 4. 178. Establishment of Mortgage to Secure Claims to be Satisfied in Accordance with a Court Judgement

After the satisfaction of the claim on the recovery of the money in accordance with a court judgement, the mortgage in respect of the debtor’s thing may be registered. The court judgement shall indicate the amount of the claim secured by the mortgage, the term of the mortgage, the thing that is registered in the Register of Mortgages and the owner of the thing thereof.

Article 4. 179. Ordinary Mortgage

Ordinary mortgage is the mortgage of one definite immovable thing possessed by the right of ownership in order to secure the discharge of one definite obligation.

Article 4. 180. Joint Mortgage

Joint mortgage is a simultaneous mortgage of several immovable things belonging by the right of ownership in order to secure the discharge of one definite obligation.

Article 4.181. Mortgage of the Thing of Another

The mortgage of the thing of another is the mortgage of an immovable thing belonging by the right of ownership in order to secure the discharge of the debt obligation of the other person.

Article 4. 182. Maximum Mortgage

The maximum mortgage is the mortgage of an immovable thing when an agreement is made only to secure the maximum sum of obligations on the basis of a mortgaged thing and on the area in which the loan will be used. The maximum mortgage is registered for a period not exceeding five years.

Upon the expiration of a five-year period, the amount of debt is fixed in the Register of Mortgages and the mortgage commences as an ordinary mortgage. This mortgage shall not secure any other subsequent debt obligations. When the date of fixing the amount of debt is not specified in the mortgage contract, the mortgagee may request to fix the amount of debt at any time, but not earlier than three years after the date of the registration of the mortgage.

The amount of debt is fixed when other creditors request a foreclosure sale of the mortgaged thing, upon the seizure of the mortgaged thing, upon declaring the debtor or the creditor insolvent or upon their liquidation, upon the death of the creditor or the debtor and if the inheritors of property fail to re-register the mortgage on their own name within six months as the day of the inheritance descends to them.

The fixing of the amount of debt is cancelled if creditors withdraw the request for a foreclosure sale of the thing, if the seizure of an immovable thing is revoked or the liquidation of the debtor or the creditor is rescinded.

The maximum amount of the obligation security may not be increased without the approval of other mortgage creditors of the same thing in rank.

Article 4.183. Common Mortgage

Common mortgage is the mortgage of several immovable things belonging to different owners in order to secure one debt obligation.

The owner of the thing mortgaged by the common mortgage wishing to mortgage the same thing once again has to get a written approval of all other owners of things that are mortgaged by the common mortgage.

The contract on the common mortgage has to set forth the order of priority in the foreclosure sale of mortgaged things.

Article 4. 184. Conditional Mortgage

Conditional mortgage is the mortgage of a thing in order to secure the discharge of the debt obligation provided that it has been agreed that the mortgage becomes effective from the moment of the fulfilment of the condition stipulated in the contract or the mortgage will be effective only till the moment when the condition stipulated in the contract is fulfilled. The condition may be imposed on both the creditor and the debtor.

Before the fulfilment of the condition determining the coming into effect of the mortgage, the mortgage may be closed by the mortgage judge at any time on the request of the party concerned.

If the condition determining the termination of the mortgage is no longer being fulfilled, the party concerned has the right to apply to the mortgage judge and to demand the termination of the mortgage.

SECTION TWO

REGISTRATION OF THE MORTGAGE

Article 4.185. Execution and Registration of the Mortgage

The mortgage contract, a unilateral declaration of the owner of the mortgaged thing thereof as well as the application to register the compulsory mortgage shall be executed as a mortgage bond. When the mortgage is contractual, the mortgage bond shall be certified by the notary.

The mortgage contract (bond) is signed by a debtor, creditor and the owner of the mortgaged thing (when the debtor and the owner of the thing is not the same person). When the thing is mortgaged upon a unilateral declaration of its owner, the mortgage bond is signed by the owner of the mortgaged thing only. If the mortgage is compulsory, the mortgage bond is signed by the creditor.

The mortgage is registered in the Register of Mortgages upon the decision of the mortgage judge and upon the submission of the mortgage bond to the Mortgage Office of the locality wherein the mortgaged thing is located.

Changes of the mortgage are entered into the mortgage bond and are registered in the Register of Mortgages subject to the same procedure as the mortgage.

Data of the Register of Mortgages shall be public and shall be regarded as accurate and comprehensive until contested in the manner prescribed by laws.

Article 4.186. Contents of the Mortgage Bond

The mortgage bond shall indicate the location and the date where it is drawn up, the debtor, the creditor and the owner of the mortgaged thing (when the debtor and the owner of the thing is not the same person), their place of residence (office), the mortgaged thing, its valuation and locality, the obligation secured by the mortgage, its definite or maximum amount (when the mortgage is contractual) and the date of the performance of the obligation. The amount of the obligation in the mortgage bond is indicated with the interest thereof. When the mortgage is compulsory, the grounds for the establishment of the mortgage are indicated wherein.

Other data may also be indicated in the mortgage bond.

If the mortgage bond is drawn up unilaterally by the owner of the mortgaged thing, the creditor may not be indicated. In that event, a bearer mortgage bond is drawn up and that may, upon the request of its holder and at any time, be executed as a registered mortgage bond.

Article 4.187. Time of the Mortgage Becoming Effective

The mortgage becomes effective from the moment of its registration in the Register of Mortgages when respective inscriptions are entered into the public register.

Article 4.188. Lack of Correspondence between the Mortgage Bond and the Data of the Register of Mortgages

Where the text of the mortgage bond does not correspond with the entry of the Register of Mortgages, the entry in the Register of Mortgages shall prevail. In that event, the damage sustained by the honest mortgage bond holder through the fault of the office of the Register of Mortgages is compensated for by the State in the manner prescribed by laws.

SECTION THREE

TRANSFER AND PLEDGE OF THE MORTGAGE

Article 4.189. Transfer of the Claim Secured by Mortgage

The creditor may transfer the claim secured by mortgage or part of it to another person unless the mortgage contract provides otherwise. The claim secured by mortgage is transferred in accordance with rules stipulated by the requirements of Book Six of this Code regulating the assignment of claim.

The claim secured by mortgage is assigned by transferring the mortgage bond by endorsement (the entry of the holder of the mortgage bond by which the mortgage bond is transferred to another person). When part of the claim secured by mortgage is transferred, the mortgage bond shall specify which of the creditors shall keep the mortgage bond.

The endorsement shall be written on the mortgage bond by indicating the person to whom the claim secured by mortgage is transferred; the endorsement should be signed by the endorser (the holder of the mortgage bond) and registered in the Register of Mortgages.

The transfer of the claim secured by mortgage (the endorsement of the mortgage bond) is registered in the Register of Mortgages in accordance with the same procedure as the mortgage.

Article 4. 190. Right of the Mortgagee to Transfer his Priority for the Satisfaction of his Claim from the Value of the Mortgaged Thing to Another Mortgagee

If the thing is subject to several mortgages, any mortgagee may transfer his priority for the satisfaction of his claim from the value of the mortgaged thing to another mortgagee of the same debtor. A corresponding entry is made upon both mortgage bonds. If the sum of the claim of the mortgagee who transfers his priority is smaller than the sum of the claim of the transferee, a notarised consent of the creditors succeeding the transferor and preceding the transferee is necessary.

Article 4.191. Pledge of the Claim Secured by Mortgage

The mortgagee may pledge his mortgage claim to secure a loan to be granted or granted to him only when the date of maturity is not later than the date of maturity stipulated in the mortgage bond.

The mortgage claim is pledged upon an agreement between the parties by making an entry in the mortgage bond and becomes effective from the date of registration of the agreement in the Register of Mortgages. The agreement is executed as a pledge bond of a movable thing.

SECTION FOUR

RECOVERY OF DEBT FOR THE BENEFIT OF THE MORTGAGEE

Article 4.192. Right of the Mortgagee to Apply for the Recovery of Debt

If within the time period indicated in the mortgage bond the debtor fails to discharge the obligation, the mortgagee may exercise his rights by applying to the mortgage judge with the request to sell the mortgaged thing in a public forced auction sale and that he be fully paid the due sum from the proceeds that he is entitled to receive before other creditors or that he should be granted the right to administer the mortgaged thing.

Upon the seizure of the mortgaged thing by the mortgage judge pursuant to the application of the mortgagee, the owner of the mortgaged thing shall forfeit his right to transfer the thing to other persons, to pledge, lease or encumber it or to decrease its value.

When the mortgaged thing is transferred to the mortgagee for administration and it turns out while administrating that it is not possible to satisfy the claim secured by mortgage, the mortgagee may apply to the mortgage judge to sell the mortgaged thing at the foreclosure sale.

Article 4.193. Right of the Mortgagee to Satisfy the Claim from the Mortgaged Thing

If the proceeds from the f public forced auction sale of the mortgaged thing are lower than the sum due to the creditor, the creditor has the right to claim recovery from the property of another debtor in accordance with the regular procedure prescribed by laws.

In the event of multiple mortgages of the thing, claims of mortgagees are satisfied according to the time of their application for registration. The mortgagee who has submitted the application for registration earlier may be obliged to cover the damages of the mortgagee who has submitted the application later, if urged by the latter, the mortgagee who has submitted the application earlier unreasonably delayed the exercise of his rights.

If the mortgaged thing was expropriated or confiscated, the claim of the mortgagee is satisfied respectively by a new possessor of the thing or by the State, however not in the excess of the value of the mortgaged thing.

If the mortgaged thing passes into the ownership of the State or the Municipality by right of inheritance or the mortgaged ownerless thing is assigned by a court judgement into the ownership of the State or the Municipality, the claim of the mortgagee is satisfied by the State or the Municipality, however not in excess of the value of the mortgaged thing.

Article 4.194. Recovery of the Debt by Selling at the Forced Auction Sale the Thing Mortgaged by Joint Mortgage

The priority of the sale of things mortgaged by joint mortgage is set by the owner of things.

When things mortgaged by joint mortgage are sold at a public foreclosure sale the debt is recovered simultaneously from all things sold and only as many of the items may be sold as it is necessary for the satisfaction of the mortgagee’s claim.

Article 4.195. Recovery of the Debt by Selling the Thing Mortgaged by the Mortgage of the Thing of Another

The owner of the mortgaged thing is liable for the discharge of the debtor’s obligation by his mortgaged thing only.

When the owner of the mortgaged thing discharges the debtor’s obligation or if his thing was sold at a public forced auction sale, the owner of the mortgaged thing acquires the right of recourse for the amount paid or for the indemnification of damages due to the loss of the thing.

Article 4.196. Right to Acceleration of the Claim Secured by Mortgage

The mortgagee has the right to demand the acceleration of the claim secured by mortgage in the same manner as at maturity provided:

1) other creditors are demanding, in cases provided by laws, a foreclosure sale of the mortgaged thing;

2) the debtor has died;

3) bankruptcy proceedings of the debtor or the owner of the mortgaged thing (not a legal person) have been initiated or a decision on its liquidation has been adopted;

4) the value of the thing has decreased, while the debtor has failed to discharge part of debt obligation whereby the value of the mortgaged thing has decreased when this part of obligation has not been covered by the insurance amount received;

5) the contract of insurance of the mortgaged thing has been terminated before its expiration or, after the termination of the insurance contract, the thing is not insured.

If the value of the mortgaged thing has decreased while the debtor has failed to discharge part of his obligation whereby the value of the thing decreased, or the thing was lost, creditors have the right to the insurance amount of the thing not in excess of the amount of their claims to be paid in the manner of priority of the satisfaction of their claims. Upon the receipt of a written agreement of all creditors, the insurance amount may be paid to the owner of the mortgaged thing.

SECTION FIVE

EXTINCTION OF THE MORTGAGE

Article 4.197 Grounds and Moment of Extinction of the Mortgage

The forced sale of the mortgaged thing on the request of the mortgagee shall disencumber it from all mortgages.

The owner of the mortgaged thing or the debtor may demand the termination of mortgage, if:

1) the debt obligation has been performed;

2) the mortgage in respect of the thing has been cancelled;

3) the mortgagee or his whereabouts have been unknown for ten years at the maturity.

The mortgage may extinguish upon the agreement of the mortgagee and the debtor or when the mortgagee relinquishes the mortgage.

If at the maturity the mortgagee refuses to accept the thing secured by mortgage obligation, the debtor may pay the respective amount into the deposit account of the mortgage office. The mortgage extinguishes when the total amount has been paid into the deposit account.

The time of the extinction of the mortgage is the moment of its de-registration from the Register of Mortgages.

CHAPTER XII

THE PLEDGE

Article 4.198. Concept of a Pledge

A pledge shall mean pledging of a movable thing or real rights securing the discharge of an existing or future debt obligation when the object of the pledge is transferred to the creditor, a third person or remains with the pledgor. The object of a pledge remaining with the pledgor may be locked, sealed or marked by marks indicating that it has been pledged.

Pursuant to the pledge, the creditor (the pledgee) has the right to satisfy his claim from the value of the collateral prior to other creditors, if the debtor fails to discharge the obligation secured by the pledge (in the event of default).

Article 4.199. Grounds for the Pledge

A pledge is created by contract or by law. When a pledge is created by law, the law shall specify exactly the thing subject to a pledge.

Provisions of this Book regulating legal mortgages are applied mutatis mutantis to a legal pledge (when a pledge is created by law or on the grounds of a court judgement).

Article 4.200. Claims Secured by the Pledge

A pledge may secure a performance of any monetary obligation.

A pledge is a derivative obligation from a principal obligation. Rights of the pledgee are derived from his rights as a creditor and the exercise of these rights depends on the fate of the obligation secured by a pledge.

Unless otherwise provided in the contract or by the law, a pledge secures a claim to the extent it is at the time of its satisfaction including interest, punitive interest, losses incurred due to delay and necessary recovery expenses that are covered first of all.

Article 4.201. Object of the Pledge

Movable things and real rights may be the object of the pledge.

Things in respect of which under the existing laws enforcement may not be levied as well as movable things that have been pledged together with an immovable thing in accordance with the procedure established in Article 4.171(3) of this Code may not be the object of the pledge.

Unless otherwise provided in the contract and by the law, a pledge of the thing covers accessories of the thing and non-separated fruits.

The risk for an accidental destruction or a breakdown of the thing is borne by the pledgor, unless otherwise provided in the contract or by the law.

In cases established by law, things that will come into the pledgor’s ownership in the future may also be the object of the pledge. Enforcement may be levied in respect of those things only when they come into the pledgor’s ownership.

Jointly owned things may be pledged only upon a written consent of all co-owners.

Article 4.202. Pledge of Goods in Stock that are in Circulation

A pledgor, having pledged goods in stock that are in circulation (goods, raw materials, semi-finished goods, finished goods), has the right to change the composition and form of pledged goods in stock provided their total value is not reduced. When pledged goods are sold while the pledgor is engaged in business as set forth in its bylaws, the pledge of goods is released and new goods in stock acquired by the pledgor become the object of the pledge from the time of acquisition of the goods into ownership.

Article 4.203. Substitution of the Collateral

Upon the consent of the pledgee(s), the pledgor may substitute the thing defined by individual characteristics, that is the object of the pledge, by another thing that has not been previously pledged.

In the case specified in paragraph 1 of this Article, the pledge of the prior thing is revoked following the execution of the pledge of a new thing.

Article 4.204. Real Rights as the Object of the Pledge

Rights towards the land, forest, other things, i.e. the right of use, the right of lease and other property rights, except for rights related to the personality of the owner of the thing pledged as well as rights that are not transferable by laws or by the contract may be the object of the pledge.

In cases prescribed by laws, property rights that the pledgor will acquire in the future may also be the object of the pledge.

When a property right subject to a pledge is evidenced by securities or special documents, they are transferred to the pledgee unless otherwise provided by laws or by an agreement of the parties.

Article 4.205. Insurance of the Object of the Pledge

The law or the contract may stipulate the duty to insure the thing that has been pledged (the thing to be pledged).

A contract may also provide for the duty of the pledgor (a legal person) to insure the object of the pledge in the event of liquidation or insolvency.

In the event of insured accident, the creditor whose claims are secured by the pledge has a priority right (in accordance with the succession of pledges, if there have been multiple pledges) to satisfy his claims from the sum of the insurance indemnity.

Article 4.206. The Pledgor

A debtor himself and a third person may also be the pledgor.

The pledgor must be the owner of the collateral or a person having the property right that is the object of the pledge except when the law stipulates that the object of the pledge may be acquired into the pledgor’s ownership in the future.

A property right that belongs to several persons may be pledged upon a written consent of all of them.

The lessee (the recipient of the loan-for-use) may pledge rights related to the lease of the thing (loan-for-use) only upon a written approval of the lessor (delivering party).

Article 4.207. Remaining of the Right to Pledge when the Right of Ownership of the Collateral has been Transferred to Another Person

When the right of ownership of the collateral is transferred to another person, the right to pledge remains due when the object of the pledge was transferred to the pledgee or when the pledge bond was registered in the Register of Mortgages unless the laws provide otherwise. This rule also applies when property rights constitute the object of the pledge.

The right to pledge is valid in all its entirety and in the case when the debtor performs the obligation partially.

Article 4.208. Right to Inspect the Subject of Pledge

A creditor has the right to inspect the number, condition, storage conditions, etc., of pledged things controlled by the pledgor unless otherwise provided in the contract.

When the pledgor violates storage conditions of the collateral, refrains to submit a damaged thing or to supply the remains of the destroyed thing, the creditor is entitled to request the discharge of the obligation secured by the pledge before the expiration of its term.

Article 4.209. Form of a Pledge Contract and of a Unilateral Declaration of the Owner of the Object of the Pledge

When the object of the pledge is transferred to the pledgee, a written pledge contract is concluded. A pledge contract may be concluded as an individual contract or as a pledge contract that could be included into the agreement from which the principal obligation arises.

When the object of the pledge is transferred to a third person or remains with the pledgor, a pledge contract and a unilateral declaration of the owner of the object of the pledge to pledge things or property rights is drawn by perfecting a pledge bond certified by a notary and registered in the Register of Mortgages.

Non-compliance with rules laid down in paragraphs 1 and 2 of this Article turns the contract null and void.

A pledge contract (bond) is signed by a pledgor, a debtor, a creditor and a person to whom the object of the pledge is transferred. If the object of the pledge is pledged by a unilateral declaration of the owner, the pledge bond is signed only by a pledgor.

The pledge of the thing may be executed by transferring to the creditor documents granting rights towards this thing (consignments, etc.).

Article 4.210. Contents of a Pledge Contract (Bond)

A pledge contract (bond) shall indicate the following: the venue and the date of its conclusion, a pledgor, a debtor, a creditor and a person to whom the object of the pledge was transferred, their place of residence (office), the description of the collateral (property rights), the value and the location, an obligation secured by a pledge (interest included), the amount or a maximum amount of the obligation and the date of performance.

A pledge contract (bond) may include other additional data.

Article 4.211. Subsequent Pledges

When by a prior pledge the thing was not transferred to the pledgee and if the pledge bond does not provide otherwise, a subsequent pledge is allowed when the object of the pledge is not transferred to the pledgee. In such cases, the prior pledge remains valid.

A pledgor must notify each creditor about all prior and subsequent pledges and obligations secured by the pledge and their amount. A pledgor must compensate the losses incurred by any of the creditors arising from the failure to discharge this duty.

Article 4.212. Pledge Priority

If in respect to the same subject of the pledge several pledge bonds are registered, the priority is given to the claim that is secured by a registered pledge bond of the application filed earlier.

The creditor’s claim in respect of which the pledge right was created later is satisfied only following the compensation of expenses related to the sale of the collateral and having fully satisfied the claims of a prior creditor.

Article 4.213. Creation of the Right to Pledge

The right to pledge is created as of the time of the conclusion of the pledge contract when the collateral is transferred to the creditor. When the collateral remains with the pledgor or is transferred to a third person, the right to pledge is created as of the time of the registration of the pledge in the Register of Mortgages.

Article 4.214. Duties of the Person to whom the Collateral is Transferred

The person to whom the collateral has been transferred must take proper care of it. He is liable for the preservation thereof if he fails to prove that the thing has been lost or damaged through no fault of his. This person has no right to use the collateral unless otherwise provided by law or the contract.

Article 4.115. Vindication of the Collateral

If the collateral ceases to be controlled by a pledgee, a pledgor or a third person, the pledgee or the third person can vindicate the thing in accordance with Articles 4.95-4.97 of this Code.

Article 4.216. Creation of the Right of Enforcement towards the Object of the Pledge

A pledgor acquires the right of enforcement towards the object of the pledge, upon a failure to perform, but not earlier than 20 days after the expiry of the time period for the performance of the obligation. The beneficial term that is not shorter than ten days may be set up by a mutual agreement of the parties.

A creditor is entitled to demand that the obligation secured by the pledge be perform before the expiration of the maturity date when the enforcement is directed towards the collateral by another person, if the pledgor dies or the liquidation procedure of the pledgor (the legal person) commences, the collateral has been lost or, due to circumstances beyond the control of the pledgor, its value decreased by more than 30 percent; the pledgor prevents the creditor from inspecting the condition of the collateral; terms of the pledge contract are breached in respect to a subsequent pledge or if the pledgor fails to comply with other contract terms and conditions or performs acts that may result in the decrease of value of the collateral or the enforcement may become impossible.

Article 4.217. Enforcement towards the Object of the Pledge that Consists of Two or More Things (Property Rights)

When the object of the pledge consists of two or more things (property rights), the enforcement may be directed towards all those things (property rights) or towards each of them individually. The right of choice belongs to the pledgee till a full satisfaction of the claim.

Article 4.218. Consequences Arising when the Claims of the Pledgee are Satisfied by a Third Person

When a claim of a pledgee is fully satisfied by a third person, the right to pledge together with a right to claim are transferred to him.

Article 4.219. Enforcement Procedure of Collaterals

When a debtor fails to perform the obligation secured by a pledge, the claim of a creditor is satisfied from the value of the collateral, unless the law or the contract provides otherwise.

A creditor must notify a debtor and a pledgor (when a pledgor is not the same person as a debtor) in writing, that if the obligation secured by a pledge within the time period stipulated in Article 4.216 of this Code is not performed, the enforcement shall commence. If a pledge is registered in the Register of Mortgages, a written warning notice to a debtor is delivered through the Office of Mortgages that is bound to inform all persons listed in the Register of Mortgages who are entitled to the thing against which the enforcement is levied.

A pledgor, having received a warning notice about the enforcement of the thing, has no right to transfer, lease or otherwise encumber it. The collateral is to be transferred to a creditor. In that event, the procedure specified in Article 4.125 shall apply.

If the pledgor fails to transfer the collateral to the creditor, the creditor may apply to a mortgage judge with a request to seize and to transfer the collateral to him.

A creditor sells the collateral in the manner agreed by a creditor, a debtor and a pledgor (when a pledgor is not the same person as a debtor) or, upon their mutual agreement, the collateral is transferred into the ownership of a creditor; failing the agreement – it is sold at the auction. If the thing is subject to several pledges, it can be sold into the ownership of one of the creditors only upon the agreement of all creditors. The creditor converts pledged securities in accordance with the procedure established by laws. When the collateral is sold, proceeds are transferred to the deposit account of the Office of Mortgages and distributed in accordance with the procedure established by the Civil Procedure Code.

When the amount received from the sale of the collateral is not sufficient to fully satisfy the claim of the pledgee and if the law or the contract do not provide otherwise, the pledgee has the right to recover the remaining amount from the debtor’s other property. In that event, the pledgee shall not have any priority against other creditors.

Article 4.220. Realisation of Property Rights Subject to a Pledge

If property rights are the object of the pledge, they are realised by transferring to a creditor the pledgor’s claims arising from the pledged right or part of a claim corresponding to the amount of a debt obligation when the debt obligation is smaller than the right to claim.

A creditor acquires the right to demand the transfer of the pledged right as from the time when he acquires the right to direct the enforcement against the object of the pledge.

Article 4.221. Procedure for the Satisfaction of the Creditor’s Claim Secured by the Funds in the Bank Account of the Pledgor

When funds in the bank account of the pledgor were pledged to secure the discharge of an obligation, upon delivery to the debtor a warning notice about the enforcement, the right to operate the bank account of the pledgor is assigned to the creditor by a written application of the pledgor, or if he objects, by a decision of a mortgage judge.

Having satisfied the claim from the existing and incoming funds in the pledgor’s bank account, the right of the creditor to operate the account of the pledgor terminates and the creditor is bound to return to the pledgor the pledge bond with an inscription therein about the satisfaction of the claim.

Article 4.222. Settlements after the Sale of the Collateral

If after the sale of the collateral, the proceeds are in excess of the creditor’s claim, the difference in the amount must be paid to the pledgor.

If through the fault of a creditor, the collateral was sold by a lower price, the pledgor has the right to demand the difference between the real market value of the thing and the price for which the thing was sold.

Article 4.223. Transfer of the Claim Secured by the Pledge or the Right Arising from the Pledge

The contract on the assignment of the claim secured by the pledge or part of it shall be concluded following the rules established in Book Six of this Code specifying requirements for the assignment of a claim. A debtor should be notified about the assignment of a claim, and if the pledgor is a third person – he shall also be notified.

The right of claim arising from the registered pledge is effected by way of assignment of the pledge bond by endorsement. The assignment of the right of claim is registered in the Register of Mortgages in the same manner as the pledge.

Article 4.224. Extinction of the Right to Pledge

The right to pledge is extinguished:

1) upon the extinction of the obligation secured by the pledge;

2) upon the loss of the collateral;

3) when the pledgee acquires the ownership right towards the collateral or when the pledged rights are assigned to the pledgee;

4) when the creditor can not satisfy its claim from the subject of the pledge due to the delay of the limitation of actions;

5) by the agreement of parties or when the creditor renounces the pledge.

When the pledged property is transferred upon the demand of the creditor to whom the property has been pledged, all property pledges are revoked.

Article 4.225. Guarantees of the Pledgor’s Interests

A pledgor has the right at any time from the date of the maturity of the obligation till the moment of the realisation of the subject of the pledge to revoke the pledge by properly discharging the obligation secured by the pledge.

If the obligation secured by the pledge may be discharged in parts, the pledgor has the right to suspend the enforcement of the subject of the pledge by discharging part of the obligation in respect of which the deadline for the discharging the obligation has not been effected.

The pledgor has the right to claim from the creditor compensation for losses incurred during the enforcement proceedings, also losses resulting from an improper custody of the subject of the pledge or a compulsory sale.

Article 4.226. Extinction of the Right to Pledge by Depositing Money

If the pledgor refuses to accept the performance of the monetary obligation secured by the pledge, the pledgee may pay a respective amount into the depository account of the notary, bank or any other credit institution and when the pledge is registered in the Register of Mortgages – into the depository account of the Office of Mortgages. After a total sum of the debt has been deposited, the right to pledge extinguishes.

Article 4.227. Concept of the Pledge at a Pawnshop

Articles of personal use may be pledged at pawnshops in order to secure the repayment of short-term credits that are granted to natural persons by pawnshops.

When transferring pledged things to a pawnshop, the pledgor is issued a pledge ticket.

Article 4.228. Rights, Duties and Responsibilities of a Pawnshop

A pawnshop has no right to use or dispose of pledged things except in the case specified in paragraph 3 of this Article.

A pawnshop is responsible for the loss (destruction) and damage in respect of pledged things, if it fails to prove that things have been lost (destroyed) or damaged due to force majeure.

If within a specified period the amount of credit secured by the pledge of the thing is not returned to a pawnshop, the pawnshop has the right upon the expiration of one month to sell the pledged thing in accordance with the procedure established in paragraphs 2 and 5 of Article 4.219, Articles 4.222 and 4.225.

After the pledged thing is sold, the right of claim of a pawnshop in respect of the pledgor (debtor) terminates even if the amount received from the sale of the thing is not sufficient to satisfy the requirements of the pawnshop as a creditor.

SECTION XIII

RETENTION OF A THING

Article 4.229. Contents of the Right of Retention

A lawful possessor who has the right of claim in respect of the owner of the thing belonging to another is entitled to retain the thing until his claim is satisfied.

The right of retention may not be exercised before the term for performance of the obligation.

Other laws may specify other rules for the retention of the thing.

Article 4.230. Indivisibility of the Right of Retention

The right of retention shall not be divided, therefore the possessor may retain the entire thing until his claim is fully satisfied.

Article 4.231. Right in Respect of Fruits of the Retained Thing

A person who enjoys the right of retention may keep the fruits of the retained thing and thus satisfy his claims prior of other creditors.

Initially the interest is paid from the proceeds resulting from the fruits of the thing, while claims arising from the principal obligation are satisfied subsequently.

Article 4.232. Custody Conditions of the Retained Thing

agreed otherwise.

If A person who has the right of retention must keep and preserve the thing in such a way that its security is ensured.

A person who has the right of retention may not lease, pledge or otherwise encumber the thing or use it in accordance with its destination except for the use that is necessary to preserve the thing unless the law provides otherwise or the person who retained the thing and the owner of the thing have a person who has the right of retention breaches the duties laid down in paragraphs 1 and 2 of this Article, the debtor has the right to apply to the court with a request to transfer the thing to him.

Article 4.233. Remuneration of Expenses Related to the Retention of the Thing

If the person who has the right of retention incurred expenses related to the retained thing, he may demand from the owner of the thing to cover the expenses thereof except when the owner proves that such expenses were not necessary.

If the person who has the right of retention within the time of retention incurs expenses that increase the value of the thing, he may demand from the owner of the thing to pay the amount by which the value of the thing has increased or to cover expenses in some other way.

Article 4.234. Limitation of Actions in Cases of Retention

The exercise of the right of retention shall have no impact on the limitations of actions that has been established for the claim in respect of which the possessor of the thing has the right thereof.

Article 4.235. Extinction of the Right of Retention

The debtor, having submitted the adequate proof that he has performed his obligation, is entitled to demand the transfer of the thing to him.

The right of retention of the thing extinguishes, when the possessor of the thing loses the right to operate except when, upon the consent of the owner of the thing (the debtor), the thing is leased or pledged to other persons.

Provisions of this Chapter shall regulate the activities of each person who administrates the property belonging by the ownership right to another except cases when this Code or other laws provide for the other form of property administration.

Administration is established by a court order, by law or by transaction. In cases provided for under this Code, the administration may be established by an administrative act.

The administration fact of an immovable thing is registered in the public register and the administrator thereof is indicated.

Article 4.237. Property Administrator

Any natural or legal person who is permitted by legal acts to provide administrative services may be a property administrator.

In concluding transactions the administrator is bound to indicate that he acts in the capacity of an administrator.

Article 4.238. Right of the Property Administrator to Remuneration

The property administrator is entitled to the remuneration fixed in the act establishing administration except cases when according to the law the administration is gratuitous. If in the act establishing administration the remuneration is not fixed, it is established by court according to the market value of the services rendered by the administrator.

If the administrator is not paid on time, he is entitled to keep the appropriate amount as remuneration for the administrative services rendered from the sum to be paid to the beneficiary, or to retain the property till the time he is paid.

If there are several beneficiaries, they all are under a solidarily obligation in respect to the payment of the remuneration to the administrator.

A person acting without right or authorisation is not entitled to any remuneration.

Article 4.239. Kinds of Property Administration

A simple administration is established when the administrator performs all the acts necessary for the preservation of the property or useful for the maintenance of the use for which the property is destined; a full property administration is established when the administrator is not only to preserve the property but increase it and to make it productive and to use it to a purpose in the best interests of the beneficiary.

The kind of administration is established in the administration act. If the kind of administration is not established in the administration act, it shall be deemed to be simple administration.

Article 4.240. Contents of Simple Property Administration

In case of simple administration, the administrator is bound to collect the fruits and revenues of the property, to register debts and to give valid acquittance for them from the property under his administration and to exercise other rights pertaining to the property operation and use. The administrator is entitled to make sound investments in accordance with the provisions of this Chapter.

If securities are administrated, the administrator is entitled to vote and exercise other rights and obligations pertaining to securities.

The administrator is not entitled to change the destination of the property unless he is authorised to make such a change by the court.

With the authorisation of the court, the administrator may transfer the property to other persons for payment or to charge it with a pledge where it is necessary for the payment of the debts or the maintenance of the value of the property. The administrator may dispose of perishable property without an authorisation of the court.

Article 4.241. Contents of Full Administration of Property

In case of full administration, the administrator, in addition to rights stipulated in Article 4.240 of this Code, may transfer the property, invest, pledge, charge it with a real right or change its destination.

Article 4.242. Obligations of the Property Administrator Towards the Beneficiary

The administrator shall, in carrying out his obligations, comply with laws and rules of the administration act. The administrator is not liable for loss of the property resulting from its normal depreciation and for the decrease of property value or the destruction of property due to force majeure.

The administrator must carry out his obligations with prudence, honesty and solely in the best interests of the beneficiary. The administrator may not exercise his powers in his own interest or that of a third person.

If the administrator himself is a beneficiary, he shall exercise his obligations in common interests of all beneficiaries by acting impartially and by respecting and equally protecting their rights.

The administrator shall have the right to make claims related to the administration of property as well as to enter the case in relation to the administrated property initiated by other persons.

The court, in appreciating the extent of civil liability of the administrator for the damage caused, and in view of the fact that the administrator has acted gratuitously and other important circumstances, may reduce the resulting damages.

Article 4.243. Prohibitions in Respect of the Property Administrator

The administrator shall be prohibited from carrying out his functions in is own personal interest. The administrator must notify the beneficiary without delay about each conflict of interests.

The administrator shall have no right to merge or mingle the property under administration with his own property, to use the administrated property or information related to the administration of the property in his interests except with the consent of the beneficiary or by the act establishing administration.

The administrator shall have no right to transfer the administrated property to other persons gratuitously, he may not renounce any right belonging to the beneficiary in respect to the property administrated.

The administrator shall have no right to acquire the administrated property except with the authorisation of the beneficiary or the court or acquire by succession.

Article 4.244. Obligations of the Property Administrator or the Beneficiary Towards Third Persons

The administrator is not personally liable towards third persons in respect of obligations arising from property administration, except if he binds himself in his own name.

The administrator is personally liable towards third persons when he exceeds his powers unless the transaction was subsequently ratified by the beneficiary or a third person was aware of that fact that the administrator while acting exceeded his powers.

The beneficiary is liable towards third persons for the damage caused by the fault of the administrator in carrying out his functions only up to the amount he has derived from the administrator.

It shall be deemed that the administrator exceeds his powers, if he has alone performed such actions that could have been only performed jointly with another person, except cases when he has performed such actions more advantageously than he has been requested to do.

Article 4.245. Making an Inventory of the Administrated Property and Insurance

The administrator is bound to make an inventory of the property, to insure the property against theft, fire and other elemental forces, to insure his own personal civil liability or to guarantee the performance of his obligations in some other way only in when this is stipulated by law, the act establishing administration or a court judgement. Both the property and the civil liability of the administrator are insured at the expense of the beneficiary unless provided otherwise.

If the administrator is bound to make the inventory, such an inventory shall contain the following:

1) the indication of the type, value, destination, location and individual characteristics of things;

2) securities and currency in cash;

3) property related rights and obligations.

The property described in the inventory is presumed to be in appropriate condition on the date of the preparation of the inventory unless it is proved otherwise.

The administrator shall furnish the inventory to the person or the institution that entrusted him with the administration, copies of the inventory – to the beneficiary and also to other persons he knows to have an interest. Any interested person has the right to contest the inventory and demand that a new inventory is prepared.

Article 4.246. Joint Administration of the Property

Where several administrators are charged with administration, all decisions pertaining to property administration are taken by a majority of them unless the law or the act establishing administration requires all of them to act jointly.

If several administrators avoid taking a decision, the others may apply to the court for the authorisation to act individually or to modify a decision taking procedure.

An administrator is presumed to have approved any decision made in his absence unless he makes his dissent known to the beneficiary and other administrators within a reasonable time after becoming aware of the decision.

An administrator may delegate only specific acts to other persons or his representative. An administrator may delegate all his functions only to his co-administrators. An administrator himself is accountable for the actions performed by such persons.

Article 4.247. Liability of Administrators in Joint Administration of the Property

All joint administrators are solidarily liable for their administration unless their duties have been divided by the law, a court judgement or an act establishing administration. In that event each administrator is liable for his own administration only.

An administrator may be relieved of liability for the decision taken unless he immediately indicates his dissent to his co-administrators and notifies it to the beneficiary. The administrator may be relieved of liability if he proves that having declared to co-administrators his dissent he was unable for serious reasons to make his dissent known to the beneficiary.

Administrators are accountable to the beneficiary for their acts, and when they delegate their duties to other persons – they are also accountable for the acts of persons selected by them.

Article 4.248. Investment of Property under Administration

Investments of property under administration are made in the name of the beneficiary unless otherwise provided by the law or an act establishing administration.

Investments are presumed sound if the property:

1) is invested into immovable things;

2) is invested into governmental securities.

An administrator who made unsound investments of the property is liable for any loss resulting from them.

Article 4.249. Account and Use of Revenues Generated by the Administrated Property

From the revenues generated by the administrated property, the administrator is entitled:

1) to pay insurance premiums pertaining to administrated property;

2) to cover costs of the property repairs and maintenance;

3) to pay taxes payable on the administrated property;

4) to use part of property to cover depreciation expenses;

5) to discharge other obligations related to property administration.

An administrator is bound to maintain the revenue and expenditure account. By the end of a calendar year, the administrator must render a detailed summary account of his administration. If there are several property administrators, they must render a joint account unless their duties have been divided.

An administrator must allow the beneficiary examine the books and other financial documents. Any interested person may apply to the court with a request that the account be audited.

Article 4.250. Extinction of Property Administration

Administration is extinguished:

1) by extinction of rights of the beneficiary in the administrated property;

2) by expiry of the term of administration or fulfilment of the condition stipulated in the act establishing administration;

3) by disappearance of the cause that gave rise to administration or by achievement of the object of administration.

4) by termination of property administration.

Article 4.251. Extinction of Property Administrator’s Powers

The powers of a property administrator extinguish:

1) upon his death, upon liquidation of the administrator as a legal person or upon the initiation of a bankruptcy case against him;

2) when the administrator renounces his powers;

3) by declaring an administrator incapable or partially capable;

4) by his replacement;

5) by termination of administration.

The administrator may renounce his powers. He shall notify one month before a person or institution that appointed him, the beneficiary and other administrators, if there are several of them, about his resignation.

The administrator who failed to give notice of his resignation in time shall cover losses due to his resignation unless he was unable to notify for serious reasons.

A beneficiary or any other interested person concerned may apply for the replacement of an administrator if the administrator fails to fulfil his functions properly.

Upon the death of the administrator, his successors are bound to give notice of the death without delay to the person or institution that appointed him and the beneficiary. His successors must preserve the property as far as possible till the appointment of a new administrator.

Article 4.252. Consequences of the Termination of Property Administration

Upon the termination of administration, the administrator shall render a report to a person (institution) that appointed him, the beneficiary, as well as other administrators, shall deliver over the property where it is and shall deliver over all that he has received in the performance of his duties, apart from remuneration for administration.

If an administrator concludes a transaction after the termination of administration being unaware of it and when he could not be aware that the administration had terminated, such a transaction is valid and binding to the beneficiary. The same rule applies to transactions contracted that are required to preserve the administrated property. The beneficiary is also bound by transactions contracted by third persons with the administrator who were unaware that the administration had terminated.

CHAPTER XV

REGISTRATION OF THINGS, REAL RIGHTS AND JURIDICAL FACTS

Article 4.253. Objects of registration

Registered things shall be immovable things and movable things by their nature that are formed according to the procedure established by the law and the principals of registration of their acquisition and transfer are specified by legal acts.

Things indicated in paragraph 1 of this Article, encumbrances, real rights and, in cases prescribed by laws, juridical facts shall be registered in the public register.

Article 4.254. Registered Juridical Facts

The following juridical facts pertaining to things, encumbrances and real rights shall be registered in the public register:

1) transactions and decisions by which a legal status of the registered thing is changed or the possibilities for its management, use and disposal are substantially modified;

2) contracts of co-owners of the registered thing on the commonly owned thing;

3) the inheritance of the registered thing;

4) the seizure of the registered thing;

5) changes of the registered thing (its size, destination, etc.) and changes of surnames, names of persons, the name of the legal person who has real rights towards it;

6) the fact of the initiation of a civil action on the legal status of the registered thing;

7) res judicata judgements that have an impact on the legal status of the registered thing and respective court orders;

8) the fact of property administration;

9) the fact of the formation of a new thing or the disappearance of the former.

Article 4.255. Legal Principles for the Registration of Juridical Facts in the Public Register

Documents certifying that juridical facts took place based on which such juridical facts are registered in the public register are the following:

1) a decision of a public authority or a governmental institution;

2) a court judgement, order, decision, sentence;

3) a decision on the seizure of the property by institutions or officials established by laws;

4) a marriage, divorce certificate; a certificate on the change of the name, surname; a death certificate of the property owner;

5) a certificate of the right of inheritance;

6) a notification of the court about the initiation of a civil action on the legal status of the registered thing;

7) written transactions;

8) a contract (deed) of the sale of property in a public forced auction;

A person wishing to register the thing, encumbrances, real rights or juridical facts submits to the public register controller an application of a standard form.

An application to register the thing and rights of ownership towards the thing is submitted by the person who has acquired the thing, and upon the registration of real rights towards the thing of another as well as encumbrances – an application is submitted by the holder of such rights or a person interested in registration thereof. The application to register juridical facts is submitted by an authorised agency or by a person interested in their registration. A person submits the application in person or through his representative who has the authorisation issued in accordance with the procedure established by laws.

Documents certifying the acquisition of the thing into the ownership, encumbrances, the existence of real rights or the occurrence of juridical facts shall accompany the application for registration.

Article 4.257. Examination of the Application to Register Things, Encumbrances, Real Rights or Juridical Facts and the Adoption of the Decision

A public register controller shall examine and make decisions pertaining to the application to register things, encumbrances, real rights or juridical facts. When the application has been examined, the following decisions could be made – to satisfy an application that is: to register things, encumbrances, real rights or juridical facts or to reject the application: to refuse to register things, encumbrances, real rights or juridical facts. In cases prescribed by laws, a public register controller may suspend the adoption of a decision by indicating circumstances that hinder registration and by setting a deadline for the removal of those circumstances.

After the adoption of the decision to register things, encumbrances, real rights or juridical facts, documents certifying their registration in a public register are issued.

The fee for the registration of things, encumbrances, real rights or juridical facts is fixed by legal acts.

Article 4.258. An Appeal against the Registration and the Refusal to Register Things, Encumbrances, Real Rights or Juridical Facts

In accordance with the procedure established by laws, the persons concerned may appeal against the registration or the refusal to register things, encumbrances, real rights or juridical facts.

Article 4.529. Time of the Registration of Things, Encumbrances, Real Rights or Juridical Facts

Things, encumbrances, real rights or juridical facts shall be deemed registered when the respective data are entered into the public register in accordance with the procedure established by laws.

Article 4.260. Compensation for Damage through the Fault of a Public Register Controller

The damage due through the fault of a public register controller is compensated in accordance with the procedure prescribed by laws. A person shall apply to the public register controller for damage compensation no later than within one month from the date when the fact about the appearance of damage becomes known.

A public register controller is not be liable for the damage sustained by persons on the grounds of common principles for the exemption from civil liability as well as in cases when persons who incurred damage:

1)have submitted to the register controller inaccurate data;

2)having learnt out about an inaccurate or wrong inscription into a public register within one month failed to take any measures provided by laws to protect the rights that have been violated.

Disputes on the compensation of damage are settled by court.

Article 4.261. Right to Use the Public Register Data

Each natural or legal person has the right to use the public register data except for restrictions prescribed by laws. The Government shall determine the amount and the procedure for setting up the remuneration fee for the use of the public register data.

Article 4.262. Legal Status of the Register Data

The data entered into the public register shall be deemed accurate and comprehensive until contested in the manner prescribed by laws.

BOOK FIVE

LAW OF SUCCESSION

CHAPTERI

GENERAL PROVISIONS

Article 5.1. Concept of succession

Succession is the devolution of property rights, duties and some other personal non-property rights of a deceased natural person to his heirs by operation of law (intestate) or/and to successors by the will (testate).

The following shall be subject to succession: material objects (movable and immovable things) and non-material objects (securities, patents, trade marks, etc.) claims of patrimonial character and property obligations of the bequeather; in cases provided for by laws – intellectual property (authors’ property rights to works of literature, science and art, neighbouring property rights and rights to industrial property), as well as other property rights and duties stipulated by laws.

The following shall not be subject to succession: personal non-property and property rights inseparable from the person of the bequeather (right to honour and dignity, authorship, right to author’s name, inviolability of creative work, to the name of performer and inviolability of performance), right to alimony and benefit paid for the maintenance of the bequeather, right to pension, except in cases provided for by laws.

Article 5.2. Grounds for succession

Succession shall arise by operation of law and by a will.

Succession shall arise by operation of law unless the testator has changed, and to the extent he has changed, the grounds for succession by his testamentary disposition.

In the instances when there are no successors either by operation of law or by a will, or none of the successors accepts succession, or when the testator deprives all the heirs of the right to succession, the estate of the deceased shall devolve to the state pursuant to the right of succession.

Article 5.3. Opening of succession

The time of the opening of succession shall be considered the moment of death of the bequeather, and in the event where he is declared deceased, the day when the judgement of the court on the declaring of the bequeather to be deceased becomes res judicata, or the day of death indicated in the court judgement.

In the instances where it is impossible to determine which of the two or more persons survived the each other, they all shall be considered to have died at the same time, without the arising of the devolution of rights.

Article 5.4. Place of the opening of succession

The place of the opening of succession shall be considered the last place of domicile of the bequeather (Article 2.12 of this Code).

In the event where the bequeather had no permanent place of residence, the place of the opening of succession shall be considered to be:

1) the place where the bequeather lived most time during the last six months before his death;

2) if the bequeather resided in several places, the place of the opening of succession shall be considered the place of prevailing economic or personal interests of the bequeather (place of location of property or its principal part, when the property is situated in several places; the place of residence of the spouse with whom the bequeather maintained matrimonial relationship during the last six months before his death, or the place of residence of the child who was residing together with the bequeather).

Where the place of residence of the bequeather is impossible to determine in accordance with the circumstances indicated in Paragraphs 1 and 2 of this Article, the place of the opening of succession may be determined in accordance with the citizenship of the bequeather, his registration, the place of registration of the vehicles belonging to him, and other circumstances.

In the event of dispute, the place of the opening of succession may be determined by the court under the request of the interested persons, taking in regard all circumstances.

CHAPTER II

SUCCESSORS

Article 5.5. Persons who have capacity to inherit

The following persons shall have the capacity to inherit:

1) in succession by operation of law: natural persons who survived the bequeather at the moment of his death, children of the bequeather who were born after his death, likewise the State of Lithuania;

2) in succession pursuant to a will: natural persons who survived the testator at the moment of his death, likewise those who were conceived while the testator was still alive and were born after his death; persons named in the will before their conception – upon their birth;

3) in succession pursuant to a will: legal persons which existed at the moment of death of the testator, or established in executing the testator’s true intent expressed in his will.

The state or municipalities may also be entitled to inherit pursuant to a will.

Article 5.6. Persons unworthy of inheriting

Those persons shall be unworthy of inheriting either by operation of law or by a will who by unlawful intentional actions against the bequeather, or against any of his successors, or against the execution of the true intent of the testator expressed in his will, created legal situation to become successors if it was established within judicial procedure that they:

1) by malicious intent deprived the bequeathed or his successor of their life, or made an attempt on the life of those persons;

2) intentionally created circumstances which hindered the testator until his death in writing, amendment or revocation of the will;

3) by means of deceit, intimidation or coercion made the testator write up, amend or revoke the made will, or forced a successor to renounce succession;

4) concealed, forged or destroyed the will.

A successor shall not be unworthy of inheriting in accordance with Points 3 and 4 of Paragraph 1 of this Article if before the opening of succession, the will or relevant parts thereof ceased to be valid despite the actions of the successor.

Parents shall be unworthy of inheriting after the death of their children by operation of law if they were deprived of parental authority in accordance with a court judgement, and this judgement was not extinguished or abolished at the moment of the opening of succession.

Article 5.7. Forfeiture of the right of succession by a spouse

The surviving spouse shall forfeit his/her right of succession by operation of law if before the opening of succession:

1) the bequeather had applied to the court for the dissolution of marriage because of the fault of the surviving spouse, and the court had established a ground for the dissolution of marriage;

2) separation had been established by the court;

3) there was a ground for declaring the marriage null and void if a suit had been brought for declaring the marriage null and void. This point shall not apply in respect of a spouse who was not at fault for the marriage being declared null and void.

The grounds for declaring marriage null and void established in points 1 and 3 of paragraph 1 of this Article shall be established by the court before the opening of succession, or already after the opening of succession.

Article 5.8. Challenging the right of succession

A person claiming inheritance shall be able to challenge the lawfulness of the acceptance of succession as well as the issued certificate of the right of succession by bringing an action against the person who has accepted succession within a period of one year from the day of the opening of succession, or from the day when he became aware or should have become aware that the succession was accepted by another person.

Article 5.9. Effects of the challenging of the right of succession

When the court judgement by which the person claiming inheritance is not acknowledged heir with the right of succession becomes res judicata, this person shall be considered as not having accepted succession.

Where the action has been brought by a heir with the right of succession, he shall be considered as having accepted the succession, except in cases where this action is brought in the interests of other heirs.

Other heirs who ought to acquire the right of succession upon the court judgement indicated in Paragraph 1 of this Article becoming res judicata, shall have the right to accept succession within three months from the day when the court judgement becomes res judicata.

In respect of new heirs, hairship shall be considered open from the moment of the opening of succession (Article 5.3 of this Code).

Article 5.10. Persons not entitled to testamentary reservation

In the event where the beneficiary of testamentary reservation has performed actions indicated in Paragraph 1 of Article 5.6 of this Code, he shall forfeit his right to the testamentary reservation.

CHAPTER III

SUCCESSION BY OPERATION OF LAW (INTESTATE SUCCESSION)

Article 5.11. Order of intestate succession

In intestate succession, the following persons shall be heirs to inheritance in equal shares:

1) first degree descendants: bequeather’s children (including adopted children) and bequeather’s children born after his death;

3) third degree descendants: bequeather’s grandparents both on the father’s and mother’s side, bequeather’s great grandchildren;

4) fourth degree descendants: bequeather’s brothers and sisters, great grandparents both on the father’s and mother’s side;

5) fifth degree descendants: children of the bequeather’s brothers and sisters (nephews and nieces), likewise brothers and sisters of the bequeather’s parents (uncles and aunts);

6) sixth degree descendants: children of the bequeather’s parents’ brothers and sisters (cousins).

Second degree heirs shall inherit by operation of law only in the absence of the first degree heirs, or in the event of the latter’s non-acceptance or renunciation of succession, likewise in cases where the first degree heirs are deprived of the right to inherit. The third, fourth, fifth and sixth degree heirs shall inherit in the absence of heirs of superior degree or in the event of latter’s renunciation of succession or deprivation of the right to succession.

Adopted children and their descendants worthy to inherit after the death of their adoptive parent or his relatives shall be equalled to the children of the adoptive parent and their descendants. They shall not inherit by operation of law after the death of their parents and other blood relatives of a higher degree in the line of descent, likewise after the death of their blood brothers and sisters.

Adoptive parents and their relatives entitled to inherit after the death of their adoptive child or his descendants shall be equalled to the parents and other blood relatives. Parents of the adopted child and other blood relatives of a superior degree in the line of descent shall not inherit by operation of law after the death of the adopted child or his descendants.

Entitled to inherit by operation of law shall be the children of the bequeather born to their parents in marriage, or to the parents whose marriage was acknowledged null and void, likewise children born out of wedlock with their paternity established in accordance with laws.

Article 5.12. Succession by the right of representation

The bequeather’s grandchildren and great-grandchildren shall inherit by operation of law alongside with correspondingly the first and second degree heirs entitled to inherit in the event of the predecease at the time of the opening of succession of any of their parents who would have been a heir. They shall be entitled to equal shares of that part of estate which would have been inherited by their deceased father or mother pursuant to intestate succession.

Article 5.13. Spouses’ right of inheritance

The surviving spouse of the bequeather shall be entitled to inherit pursuant to intestate succession or alongside with the heirs (if any) of either the first or second degree of descent. Together with the first degree heirs, he shall inherit one fourth of the inheritance in the event of existence of not more than three heirs apart from the spouse. In the event where there are more than three heirs, the spouse shall inherit in equal shares with the other heirs. If the spouse inherits with the second degree heirs, he is entitled to a half of the inheritance. In the event of absence of the first and second degree heirs, the spouse shall inherit the whole inheritable estate.

Article 5.14. Inheritance of house furnishing and household equipment

Ordinary house furnishing and household equipment shall be devolved to the intestate heirs irrespective of their degree of descent and the share of inheritance if they resided together with the bequeather for a period of at least one year before his death.

CHAPTER IV

INHERITANCE BY WILL (TESTATE SUCCESSION)

Article 5.15. Testamentary capacity

A will may be made exclusively by the testator himself.

A will may be made only by a legally capable person who is able to comprehend the importance and consequences of his actions.

Article 5.16. Nullity of a will or its parts

A will shall be null and void if:

1) made by an legally incapable person;

2) made by a person of limited legal capacity due to the abuse of alcoholic drinks, narcotic or toxic substances;

3) its content is unlawful and impossible to understand.

A will may be acknowledged null and void on other grounds of nullity of transactions.

A perished will shall have no effect. The content of such a will may not be established by judicial procedure.

A testator may not authorise another person to establish or alter the content of a will after the death of the testator.

Article 5.17. Contesting of a will

An action for acknowledging a will or separate parts thereof null and void may be brought only by other intestate or testate successors who would be entitled to inherit if the will or separate parts thereof were acknowledged null and void.

On acknowledging a later made will null and void, the previous will shall not become effective, except in cases where a later will was acknowledged null and void because it had been made under coercion or real threat, likewise where it had been made by a person acknowledged by the court legally incapable, or by a person whose legal capacity was limited by the court on the grounds of abuse of alcoholic drinks, narcotic or toxic substances.

Article 5.18. Conditions for making a will

A testator shall make a will freely, without coercion or error. Ordinary persuasion or request of interested heirs for a will to be made in their favour shall not be considered coercion and shall not affect the validity of the will.

Mistakes in the text of the will, incorrect naming of persons, or the fact that some characteristics or state of a certain person or thing has changed or disappeared shall have no effect if the true intent of the testator is clear from the content of the will.

Article 5.19. The right of a testator to bequeath his estate at his discretion

Any natural person may bequeath all his property or a part thereof (including ordinary house furnishing and household equipment) to one or several persons irrespective of whether they are his heirs by operation of law, likewise to the state, municipalities or legal persons.

A testator may bequeath all his property or a part thereof to legal persons which will have to be established in executing the will, likewise to natural persons not yet conceived and born.

A testator may by his will disinherit one, several or all of his heirs.

In the event where the testator failed to indicate what share of his estate he bequeathed to every of his successors by the will, the estate shall be divided by equal shares to all of them.

In the event where the inheritable estate is divided by the will in such a way that all the shares in their totality exceed the amount of the whole estate, the share of every successor shall be correspondingly reduced.

In the event where the totality of all the shares is smaller than the amount of the whole estate, taking in regard the content of the will, the shares of the estate devolved upon each of the successors shall be proportionally increased or the remaining property shall be devolved by the operation of law.

Article 5.20. Right to the mandatory share of the inheritance

The testator’s children (adoptees), spouse, parents (adoptive parents) who were entitled to maintenance on the day of the testator’s death shall inherit irrespective of the content of the will a half of the share that each of them would have been entitled to by operation of law (mandatory share) unless more is bequeathed by the will.

The mandatory share shall be determined taking in regard the value of the inheritable estate, including ordinary house furnishing and household equipment.

Article 5.21. Appointment of another successor

A testator shall have the right by his will to designate another successor in case the successor appointed by the will died before the opening of succession or renounced the succession. The testator may likewise appoint another successor to the secondary successor in case the secondary successor died before the opening of succession or renounced the succession. The number of the appointments of other successors shall not be limited.

Article 5.22. Inheritance of the part of estate not bequeathed by a will

The part of the testator’s estate which remained not included into a will shall be divided in equal shares between the intestate heirs who inherit in accordance with the rules provided for in Articles from 5.11 to 5.14 of this Code.

These heirs shall also include the intestate successors who have a share of inheritable estate bequeathed to them by a will unless otherwise provided for by the will.

Article 5.23. Testamentary reservation

The testator shall have the right to obligate a testate successor to fulfil a certain obligation (testamentary reservation) for the benefit of one or several persons, while these persons shall acquire the right to demand fulfilment of this obligation. Beneficiaries of the testamentary reservation may be intestate heirs as well as any other persons.

The successor authorised by the testator shall have to fulfil the testamentary reservation without exceeding the value of the inheritable property after the claims of the testator’s creditors have been satisfied.

If the testate successor, authorised to fulfil the testamentary reservation, is entitled to the mandatory share of the inheritance, he shall fulfil the testamentary reservation without exceeding the value of the property inheritable by him which is bigger than his mandatory share.

In the event where the successor authorised to fulfil testamentary reservation dies before the opening of succession or renounces the succession, the obligation to fulfil the testamentary reservation shall be alienated to the other successors who have received the share of that successor.

In the event where the executor of the testamentary reservation is not specified in the will, the testamentary reservation shall be excluded from the inheritable estate until the shares of the property inheritable by the successors have been determined.

The testamentary reservation shall become ineffective in the event of the death of its beneficiary before the opening of the succession.

Article 5.24. Acceptance of the testamentary reservation

The beneficiary of the testamentary reservation shall have the right to accept the testamentary reservation within the period of three months from the day when he became aware or should have become aware of his entitlement to the testamentary reservation.

The beneficiary of the testamentary reservation shall inform about his acceptance thereof the executor of the will (administrator of inheritance), the successor who has accepted succession and is authorised to fulfil the testamentary reservation, or the notary public of the place of the opening of succession. In the event where the testamentary reservation is related with the right to immovable property, application in all cases shall be filed with the notary public. The notary shall issue a certificate of the right to inheritance and the testamentary reservation shall be registered in the Public Register.

Article 5.25. Types of testamentary reservation

In the event where the subject-matter of the testamentary reservation is a thing defined by its individual features, the beneficiary of the testamentary reservation, having accepted thereof, shall acquire the right of ownership to this thing from the moment of the acceptance of succession. From that moment, the thing shall be transferred to the beneficiary of the testamentary reservation together with all the rights and duties related with this thing which belonged to the testator. The accessories of the principal thing shall also belong to the beneficiary of the testamentary reservation.

In the even where the subject-matter of the testamentary reservation is composed of claims resulting from obligations, all the supplementary claims which had to be fulfilled before the death of the testator shall also belong to the beneficiary of the testamentary reservation.

In the event where the subject-matter of the testamentary reservation is movable things defined as to specific features, such testamentary reservation shall have to be fulfilled irrespective of the existence of such things in the inheritance. If there are several things of this kind, the right of choice shall belong to the beneficiary of the testamentary reservation unless otherwise provided for by the will.

The testator shall have the right to obligate a successor to whom an immovable thing (land, house, apartment, etc.) or a private (personal) enterprise is devolved to allow another person for a certain period or for life use the immovable thing or its part, or to transfer the revenue, or a part thereof, derived from that property.

In the event where the testator by his testamentary reservation established maintenance for somebody without specifying its content, such person shall be entitled to board, accommodation, clothing and medical care, and those who study shall be entitled to have their study expenses paid for the whole duration of their study, but not longer than until they reach the age of twenty-four.

Article 5.26. Bequeath of property to the society for useful and charitable purposes

A testator shall be able to bequeath his whole estate, its part, or an individual thing to the society for useful and charitable purposes. A legal person to be established in executing the wish of the testator may be appointed as successor to such property. The testator may obligate his successor or the executor of the will to establish such a legal person.

In the event where the successor or the executor of the will fails to take any action for the establishment of the legal person, the interested persons may apply to the court with a request to appoint an administrator and obligate the latter to establish the legal person stipulated in the will.

In the event of disappearance of the social need for which the estate was intended, or the property cannot be used for the purpose indicated in the will, and in absence of any related instructions from the testator, the question of a further use of such property shall be decided by the court of the place of the opening of succession. Such property must be used for the purposes similar to those indicated by the testator.

Article 5.27. Types of wills

Wills may be official and private.

Article 5.28. Official wills

Official wills are such wills which are made in writing in two copies and attested by the notary public or an official of the Consulate of the Republic of Lithuania in the relevant state.

Public wills of persons with hearing and speech impairment shall be made with the participation of a person who understands sign language and is trusted by the testator, except in cases where the person with hearing and speech impairment is literate and can read the written up will and confirm in writing of his awareness of the content of the will.

The place and time when the will was made shall be indicated therein. The written up will shall be read to the testator alone or with the participation of witnesses. The will shall be signed by the testator himself. The will shall be attested and registered in the Notarial Register in his presence. One copy of the will shall be handed in to the testator, the other shall remain with the institution which has attested it. The information about the making of the will and its content shall be confidential.

If the will possessed by the testator or any other person fails to conform to the will deposited with the notary, in case of dispute preference shall be given to the will deposited with the notary, providing that it does not contain any corrections, deletions or erasures that were not agreed upon in accordance with the established procedure.

The fact of making an official will may not be disputed.

The following shall be equalled to official wills:

1) wills of the persons undergoing treatment in hospitals or any other institutions of medical care and disease prevention or in sanatoriums, as well as the wills of persons living in the homes for old or disabled people attested by the chief doctors, their deputies for medical matters or doctors on duty of these hospitals, institutions of medical care or sanatoriums, likewise by the directors or chief doctors of such homes for old or disabled people;

2) wills of persons sailing in seagoing vessels or ships of internal waters flying the flag of the Republic of Lithuania, attested by the masters of those ships;

3) wills of persons participating in surveyor, research, sport or any other expeditions attested by the heads of those expeditions;

4) wills of soldiers attested by the commanders of those units, formations or institutions and military schools;

5) wills of inmates of the places of confinement attested by the heads of these institutions;

6) wills attested by the neighbourhood executive managers of the place of residence.

Persons indicated in Paragraph 6 of this Article shall be obliged as soon as possible to transfer the attested will to the notary in accordance with the procedure determined by the Minister of Justice.

Article 5.29. Signing of wills by another person

In the event where the testator due to his physical disabilities, illness or any other reasons is unable himself to sign the will, it may be signed upon the testator’s request and in the presence of the notary or any other official authorised to attest the will by another legally capable natural person who is not a testate successor, by concurrently indicating the reason for which the testator is not able to sign the will himself. Witnesses shall also put their signatures in the will.

Article 5.30. Private will

A private will is a will written up in hand by the testator indicating the first name and surname of the testator, the date (year, month, day) and place where the will was made, expressing the true intent of the testator and signed by him. A private will may be written up in any language. Failure to indicate the date and place of the making of the will shall render it invalid only in those cases where it is impossible to determine the date and place of the making of the will by any other way, or they are not possible to infer from other circumstances.

Corrections introduced by the hand of the testator and the deletions explained by him shall not render the will invalid. Such conditions shall be valid which were mistakenly deleted by the hand of the testator who later made an inscription by his hand testifying that those conditions were deleted by mistake. The will shall be valid if there is some word omitted by mistake, or a word contains a spelling mistake; the relevant conditions shall also be valid, providing that their meaning is not obscure.

A will which is undeniably unfinished and unsigned shall be null and void.

If a will contains an inscription about the testator’s intent to supplement it in the future though he failed to accomplish that, such will shall be valid, providing that it can be executed without the intended supplement.

Article 5.31. Depositing of a private will

A testator shall be able to deposit his will with the notary public or a consular official of the Republic of Lithuania in a foreign state. In accepting a will for deposit, the identity of the testator shall have to be established.

A deposited will shall be equalled to an official will if the deposit was performed pursuant to the following requirements:

1) the will was deposited by the testator himself who declared that the will expressed his final true intent;

2) the will was deposited in a sealed envelop, stamped with the stamp of the accepting institution, and both the testator and the person accepting the will put their signatures on the envelop;

3) an act on the acceptance of the will for deposit has been written up where it is indicated that the requirements specified in Point 1 and 2 of Paragraph 2 of this Article have not been violated, there also is presented the description of the envelope, stamps, indicated the testator’s name, surname, personal identity code, and the place of his residence, the place and date of the making of the will and its kind, likewise the official position, the name and surname of the person who accepted the will for deposit. The act shall be signed by the testator and the official accepting the will for deposit. The testator shall be issued with a copy of the act.

The accepted will shall be kept in the safe of the institution of deposit. The testator shall have the right to take the will back at any time. The will may also be handed in to an agent of the testator under a special authorisation of the testator.

In the event where a private will was not transferred for deposit in accordance with the procedure established in this Article, it must be confirmed by the court within a period of one year from the death of the testator. In this case, only a will confirmed by the court shall be valid.

Article 5.32. Register of wills

The Register of wills made in the territory of the Republic of Lithuanian shall be handled by the Central Hypothec institution.

Notaries, consular officers shall be obliged within three working days to notify the Central Hypothec institution about the attested, accepted for deposit or revoked wills. The notification shall include the testator’s name and surname, personal identity code, and the place of residence, the place and date of the making of the will, its kind, and the place of deposit. The content of the will shall not be divulged.

After the death of the testator, the data of the Register may be transferred to the court, notary and other interested persons.

Article 5.33. Announcement of the will

Upon becoming aware of the death of the testator, the notary of the place of the opening of succession shall immediately establish the day for the announcement of the will and inform about it to the known successors and other interested persons. If the envelope containing the will is stamped, it shall be necessary to write up a protocol where it must be noted whether the envelope and the stamps are intact. In the event where there are several wills, all of them shall be announced.

After having announced the will, the notary shall take all the measures necessary to establish the place of residence of all the successors and other interested persons who were not present when the will was announced, and without delay inform them about the content of the will.

Article 5.34. Time-limit for keeping the will in deposit

In the event where a will is kept in deposit for a period over thirty years, the depository institution shall be obliged by the means available to them to verify whether the testator is still alive. If it becomes clear that the testator is dead, the envelope with the will shall be opened and the will announced.

Article 5.35. Revocation, supplementing and alteration of a will

The testator shall have the right at any time to alter, supplement or revoke a will made by him by drawing up a new will, or not to make a will.

A will made at a later time shall annul the whole previous will or a certain part thereof which contradicts the later will. This provision shall not apply in respect of a joint will of spouses.

The testator may also revoke an official will by filing an application with the depositor of the will or the institution which attested it. The signature of the testator on such application shall be witnessed within the procedure established by laws.

Article 5.36. Conditions of a will

The testator may appoint a successor or a beneficiary of testamentary reservation by specifying one or several conditions to be fulfilled by them in order to inherit.

Unlawful conditions, or conditions contrary to the usages, or those violating the requirements of good morals shall be null and void.

Article 5.37. Execution of a will

A will shall be executed by the executor of the will or a successor appointed by the testator, or by an administrator of inheritance appointed by the court.

Nobody can be appointed executor of a will against his wish, however the person who has assumed the duties of the executor of the will may not relinquish those duties without important reasons.

The testator may appoint one or several executors of the will. The testator may likewise appoint a secondary executor of the will in case the primary executor is not able to fulfil his duties. In this event, the agreement of the secondary executor inscribed in the will itself or expressed in an application appended to the will shall be necessary.

The person who has signed the will on behalf of the testator may not be an executor of the will.

In the event where the testator failed to appoint an executor, or the appointed executor or a successor are not able to fulfil their duties, the district court of the place of the opening of succession shall appoint an administrator of inheritance to perform all the actions necessary for the execution of the will.

A person who has embarked upon the execution of will shall have no right to relinquish those duties without important reasons.

Article 5.38. Rights and obligations of the executor of the will appointed by the testator

The executor of the will shall perform all the actions necessary for the execution of the will. Pending the appointment of the administrator of inheritance or the establishment of the successors, the executor of the will shall perform the functions of a successor: possess the inheritance, compile the inventory of the inheritance, pay the debts of the inheritance, recover the debts from the testator’s debtors, provide maintenance for the successors who are entitled to it, perform the search of successors, establish whether the successors accept the inheritance, etc. In his activity, the executor shall be guided by the will. In executing the will, the executor shall consult with the successors. Any dispute concerning the execution of the will shall be decided by the district court of the place of the opening of succession.

In performing his duty, the executor of the will shall be obliged to act with the same diligence as in taking care of his private interests. In the event where the executor of the will receives payment for his work, he shall be liable before the successors and other interested persons for any loss caused by his negligent actions.

If the testator has appointed several executors of the will without clearly defining their corresponding rights and duties, they shall act jointly. Any disagreement between them over the execution of the will shall be decided within judicial proceedings. The executors shall be solidarily liable for the actions performed upon their mutual consent.

In the event where one of the executors has been given a specific assignment by the testator, or authorised with execution of a certain part of the will, such executor shall be liable solely for his own actions.

Expenses incurred in the execution of the will shall be covered from the inherited estate.

The executor shall perform his duties gratuitously if nothing has been specified by the testator in his will concerning payment.

Article 5.39. Inventory of inheritance

Having assumed the management of the inheritance, the executor of the will or the administrator of the inheritance shall immediately compile the inventory of the inheritance which lists the whole inheritable estate, likewise all the amounts due to and owed by the testator. A successor, who expresses such a wish, may participate in the compilation of the inventory of the property.

The executor of the will or the administrator of the inheritance shall have the right upon his discretion, or the obligation upon the demand of a successor, to apply to the court with a request to delegate the compilation of the inventory to the court bailiff.

Expenses incurred in the compilation of the inventory of inheritance shall be covered from the inherited assets.

Article 5.40. Possession of inheritance and its duration

The testator may authorise the executor of the will to possess the inheritance accepted pursuant to the established procedure, or to authorise the possession of inheritance after other assignments of the testator have been fulfilled. The duration of such possession may be specified in the will by indicating a definite time-limit or a certain event (attainment of a certain age by the successor, death of a successor, marriage, etc.). Such time-limit may not exceed the period of twenty years from day of the opening of succession.

Article 5.41. Report of the executor of the will

Having fulfilled the execution of the will, the executor or the will or the administrator of the inheritance shall be obliged upon the request of the successors to provide them with the report. In the event where the will is being executed for a period exceeding one year, and the possession of the inheritance is performed by the executor of the will or the administrator (Article 5.40 of this Code), such reports shall be submitted every year.

Article 5.42. Removal of the executor of the will or the administrator of the inheritance

In the event where the executor of the will or the administrator of the inheritance improperly fulfils his duty, violates the interests of the successors, beneficiaries of the testamentary reservation, of the testator’s creditors and those of other interested persons, the court of the place of the opening of succession shall have the right upon the demand of the latter persons to remove the executor of the will and appoint an administrator of the inheritance, to replace the administrator appointed by the court.

CHAPTER V

JOINT WILL OF SPOUSES

Article 5.43. Concept of a joint will of spouses

By their joint will, the spouses appoint each other as the successor and after the death of one of the spouses, the whole property of the deceased (including the part of the common property of the spouses therefrom) shall be inherited by the surviving spouse, except the mandatory share of succession (Article 5.20 of this Code).

Article 5.44. Making a joint will of spouses

A joint will of spouses shall be made exclusively by spouses. Such will shall be signed by both spouses in the presence of a notary or any other person attesting the will.

A joint will of spouses shall be made exclusively as an official will (Article 5.28 of this Code).

Article 5.45. Content of a joint will of spouses

By testamentary disposition each of the spouses shall provide for the devolution of his/her whole property to the other spouse.

A successor may be appointed by the will to inherit the property after the death of the surviving spouse.

A will may provide for a testamentary reservation awarded from the property of one of the spouses after his/her death, or from the common property of the spouses after the death of the surviving spouse.

The spouses may bequeath their whole property or a part thereof to the society for worthy causes or to charity. Such a direction of the will may be effectuated from the property of one of the spouses after his/her death or from the common property of the spouses after the death of the surviving spouse.

Article 5.46. Revocation and invalidity of a joint will of spouses

Each of the spouses shall be entitled before the opening of the succession to revoke the expression of his/her intention within the same procedure as the drawing up of the will. In this event, the expression of the intention of the other spouse shall lose its legal effect as well.

The wills drawn up by the spouse without previous revocation of the joint will of spouses shall be null and void.

A joint will of spouses shall be rendered invalid by the dissolution of marriage before the opening of succession or by filing a suit (bringing an application) for the dissolution of marriage, or by the consent of the spouse to the dissolution of marriage.

Article 5.47. Obtaining the deposited will

The institution which has attested the will and deposited for safekeeping may submit the will only upon the request of both spouses.

Article 5.48. Declaration of a joint will of spouses

Upon the death of one of the spouses, only the intent of this spouse shall be revealed to the interested successors in accordance with the procedure established in Article 5.33 of this Code without revealing the intent of the other spouse.

Article 5.49. Renunciation of inheritance under a joint will of spouses

Upon the death of one of the spouses, the other spouse shall have no right to modify a joint will. He shall have the right to renounce the acceptance of succession. In this event, the estate of the deceased spouse shall be devolved upon his/her heirs by operation of law, and the surviving spouse shall acquire the right to make a new will upon his/her discretion.

Such refusal on the part of the surviving spouse to accept succession shall have no effect upon the right of the beneficiary of testamentary reservation from the estate of the deceased spouse to a testamentary reservation which is issued by intestate heirs.

In the event of the surviving spouse renouncing succession, the successor appointed by the joint will to inherit after the death of the surviving spouse, shall lose the right of succession under the joint will.

CHAPTER VI

ACCEPTANCE OF SUCCESSION AND LIABILITY FOR THE DEBTS OF THE BEQUEATHER

Article 5.50. Acceptance of succession

In order to acquire succession, a successor shall have to accept it. Acceptance may not be in part, or subject to conditions or exceptions.

A successor shall be deemed to have accepted succession when he actually starts possessing the estate, has applied to the district court of the place of the opening of succession for the inventory of the estate, or when the successor files an application on the acceptance of succession with the notary public of the place of the opening of succession

Actions indicated in this Article shall have to be performed within three months since the day of the opening of succession.

Persons whose right to inheritance arises only upon the renunciation of succession by other successors, may express their agreement to accept inheritance within three months from the day of the arising of the right to accept the inheritance.

Inheritance devolved to the successors born after the opening of succession shall be accepted within three months from the day of their birth.

The notary or the court shall be obliged within three working days to inform the Central Hypothec Institution about the acceptance of succession.

Article 5.51. Acceptance of succession after the actual start of property possession

A successor shall be deemed to have accepted the inheritance if he has started to possess the estate, treating it like his own property (possesses, uses and disposes it, takes care of, pays taxes, has applied to the court by expressing his intention to accept the inheritance and appoint the administrator of inheritance, etc.). A successor, who has started to possess any part of the inheritance, shall be deemed to have accepted the whole inheritance.

A successor, who has started to possess the estate, shall have the right within the period established for the acceptance of succession to renounce succession by filing an application with the notary public of the place of the opening of succession. In this case, the successor shall be deemed to have possessed the inheritance in the interests of other successors.

Article 5.52. Liability for the debts of the bequeather by the successor who has accepted inheritance by starting to possess the estate or by filing an application with the notary

The successor who has accepted succession by taking over the possession of the estate or by filing an application with the notary shall be liable for the debts of the bequeather with his whole property, except in cases provided for in this Code. In the event where the estate was accepted by several successors by the manner indicated above, they all shall be solidarily liable with their whole property for the debts of the bequeather.

Article 5.53. Acceptance of succession in accordance with an inventory

A successor who has accepted inheritance in accordance with the inventory compiled by the court bailiff shall be liable for the debts of the testator only with the inherited property. In the event where at least one of the successors has accepted the inheritance in accordance with the inventory, all the other successors shall be deemed to have accepted the inheritance in accordance with the inventory.***

For the compilation of such inventory, the accepting successor or successors shall apply to the district court of the place of the opening of succession, while the court shall delegate the compilation of the inventory to the court bailiff.

The time-limit for the compilation of property inventory shall be determined by the court. The term-limit may not exceed the period of one month. Only in cases where the inherited estate is located in several places, or there is a considerable number of creditors of the bequeather, the time-limit may be extended for a period of not exceeding three months.

A successor shall be obliged to furnish all the data necessary for the compilation of the inventory of the bequeather’s estate.

The inventory shall contain:

1) a list of all the things comprising inheritance indicating their value and the circumstance necessary for the determination of their value;

2) indication of all known obligatory rights and duties of the bequeather by specifying the bequeather’s creditors and debtors.

The inventory of the inheritance shall be signed by the court bailiff and the successor who participated during the compilation of the inventory. At the end of the inventory, there must be an equalled to oath inscription signed by the successor to testify that the inventory includes the whole estate of the bequeather known to the successor as well as his all the bequeather’s obligatory claims and duties.

Upon becoming aware about property or obligatory claims and duties not included into the inventory, the successor (successors) shall be obliged within three working days from the day when these circumstances became known to inform the court accordingly in order to have the bailiff to supplement the inventory.

The compilation of the inventory may also be requested by the creditors of the bequeather. The creditors of the bequeather shall also have the right to participate during the compilation of the inventory or to authorise another person to participate during the compilation of the inventory.

The court shall be obliged to ensure access to the inventory of the inheritance for everyone who proves his lawful interest in the inventory.

Article 5.54. Inaccurate inventory

In the event where during the compilation of the inventory the successor (successors) due to their fault failed to indicate the whole estate comprising inheritance, concealed debtors of the bequeather, on his initiative a non-existing debt was included into the inventory, or he (they) failed to supplement the inventory, the successor (successors) concerned shall be liable for the debts of the bequeather with their whole property. The same effect will be produced by the failure of the successor to perform his duty indicated in Paragraph 4 of Article 5.53 of this Code.

In the event where the inventory contains not the whole estate without the fault of the successor, the court shall determine a time-limit for the supplementing of the inventory.

Article 5.55. Applying to the court for the administration of the property of the succession

In the event where the inherited estate is an private (personal) enterprise, a farmstead, or the bequeather’s debts might exceed the value of the inheritance, the successor, having accepted succession, may apply to the court of the place of the opening of succession with a request to appoint an administrator for the property of the succession, or request to appoint an administrator for the property of the succession and decide on the issue of auction or a starting of bankruptcy proceedings. In this event, the debts of the bequeather shall be paid only from the inheritance.

Administration of the property of the succession shall be established by a ruling of the district court located of place of the opening of succession. By this ruling, the court shall appoint an administrator of the property of the succession and determine his remuneration.

No administration of the property of the succession shall be established in the event where the inheritance is not significant, and the costs of administration would exceed the value of the inheritance, or where the major part of the inheritance would have to be used for the payment of administration costs. Administration of the property of the succession shall be abolished in the event where it becomes clear that the costs of administration would exceed the value of the inheritance.

The administrator of the property of the succession shall have the same rights and duties as the executor of the will (Article 5.38 of this Code), the norms of Chapter XIV of Book Four shall also apply mutatis mutandis in this respect.

In the event where there are several successors, they shall file a joint application for the appointment of an administrator for the property of the succession. No administrator of the property of the succession shall be determined in the event where the successors have taken over the possession of the inheritable estate.

If in the events indicated in this Article no administration of the property is established, or it is abolished, an estate inventory shall be compiled and the debts of the bequeather paid only from the property of the succession.

Any disputes among successors concerning the administration of the property of the succession shall be decided by the court by passing a corresponding ruling.

Article 5.56. Implementation of the right to succession of legally incapable persons or persons of limited legal capacity

Succession on behalf of legally incapable persons shall be accepted by their parents or guardians. Persons of limited legal capacity shall accept inheritance exclusively upon the consent of their parents or curators.

Article 5.57. Extension of the time-limit for the acceptance of succession

The time-limit established in Article 5.50 of this Code for the acceptance of succession may be extended by the court where it is determined that the time-limit was delayed due to important reasons. Succession may be accepted after the expiry of the time-limit likewise without the application to the court where all the other successors who have accepted the succession give their assent .

In the instances provided for in the preceding Paragraph of this Article, the successor who has delayed the time-limit for the acceptance of succession shall be entitled only to that part of the estate belonging to him and accepted by other successors or devolved to the state which remained in kind, likewise the means received from the disposal of the other part of the estate belonging to him.

Article 5.58. Transference of the right to accept succession

Where a successor entitled to inherit by operation of law or by a will dies after the opening of succession without having been able to accept thereof within the established time-limit (Article 5.50 of this Code), the right to accept succession shall be transferred to his heirs.

This right of a deceased successor may be implemented by his successors on general grounds within three months from the day of the opening of succession in their respect.

Article 5.59. Rights of a successor who has started possessing the inheritable estate before the appearance of other successors

A successor who has started to possess the inheritable estate in the event where there are other successors, shall have no right to dispose of the inheritable property (to sell, pledge, etc.) before the expiry of three months from the day of the opening of succession, or until he receives the certificate of the right to inheritance.

Before the expiry of the indicated time-limit, or until he gets the certificate of the right to inheritance, the successor shall only be entitled to:

1) pay the expenses for the medical treatment and care of the bequeather, likewise his funeral costs and the expenses for taking care of the grave;

2) provide maintenance to natural persons who were maintained by the bequeather;

3) ensure normal functioning of the enterprise (farm);

4) satisfy requirements arising from labour relationship;

5) protect and manage the inheritable estate.

Article 5.60. Renunciation of inheritance

An heir by operation of law or successor by a will shall have the right within three months from the day of the opening of succession to renounce inheritance. Renunciation may not be in part or subject to conditions or exceptions.

Renunciation of inheritance shall have the same effect as non-acceptance of succession.

A successor shall renounce inheritance by filing an application with the notary public of the place of the opening of succession.

No renunciation shall be allowed in the instances where the successor has filed an application on the acceptance of succession with the notary public or asked for issuance of the certificate of the right to inheritance, or applied to the district court of the place of the opening of succession for the compilation of the inventory of the estate.

Article 5.61. Increase of the shares of succession

In the event where an heir by operation of law or a successor by a will renounces succession, or the testator deprives his heir of the right of inheritance, the share of succession belonging to that successor shall devolve to the intestate heirs divided into equal shares among them.

In the event where the testator bequeathed his whole estate to the successors by his will, the share of succession which belonged to the successor who renounced or did not accept thereof, shall devolve to the other intestate heirs divided into equal shares among them.

The rules established in the present Article shall not apply in the instances where a secondary successor is appointed for the successor who has renounced or not accepted succession.

Article 5.62. Devolution of succession to the state

The inherited estate shall devolve to the state under the right of succession if:

1) the estate was bequeathed to the state by a will;

2) the testator has neither intestate heirs nor testate successors;

3) none of the successors accepted the succession;

4) all the heirs have been deprived of the right to inheritance (disinherited).

In the event where there are no intestate heirs, while only a part of the estate of a testator has been bequeathed by a will, the remaining part shall devolve to the state.

The state shall be liable for the testator’s debts not exceeding the real value of the inherited property devolved to it.

Article 5.63. The procedure for making and satisfying creditors’ claims

The creditors of a bequeather shall have the right within three months from the day of the opening of succession make claims against the successors who accepted the succession, executor of the will or administrator of the inheritance, or bring an action in respect of the inheritable property.

Claims shall be made without taking regard of the maturity of the time-limit for their satisfaction.

The procedure for making and satisfying creditors’ claims established in Paragraphs 1 and 2 of this Article shall not apply in respect of claims based on mortgage and pledge, likewise of claims related with the economic activity of the inheritable private (personal) enterprise or that of a farmer. Claims related with the activity of an inheritable enterprise or farm shall pass to the successors and be satisfied in accordance with the transactions entered into by the bequeather, except in those cases when the inherited estate is an enterprise against which bankruptcy proceedings have been started, or a farm which is insolvent.

The court may extend the time-limit specified in Paragraph 1 of this Article, where the time-limit was delayed due to important reasons and the time lapse from the opening of the inheritance does not exceed three years.

Article 5.64. Securing of inheritance

Upon having received information about the opening of succession, the court of the place of the opening of succession shall take the necessary measures to secure the inheritance if:

1) the successors are not known;

2) there are no successors in the place of the opening of succession;

3) the successors do not want or cannot accept the inheritance;

4) at least one of the successors is legally incapable;

5) the testator is known to have considerable debts;

6) there exist other circumstances determining the need to secure the inheritance.

The inheritable estate shall be secured until it is accepted by all the successors, and where it is not accepted, until the expiry of the time-limit established for the acceptance of succession.

Article 5.65. Appointment of an administrator for the inheritable estate

In the event where the inheritance includes property subject to management (private (personal enterprise), a farmstead, securities, etc.) and it cannot be performed by the executor of the will or the successor, likewise if the creditors of the bequeather bring an action before the successors accept the inheritance, the district court shall appoint an administrator of the inheritable property vested with the rights established in Article 5.38 of this Code. Provisions of Chapter XIV of Book Four shall apply mutantis mutandis in respect of the administrator of inheritance.

Article 5.66. Application for the issuance of the certificate of the right to inheritance

The successors who inherit by operation of law or by a will shall be able to present an application with the notary public of the place of the opening of succession for the issuance of the certificate of the right to inheritance.

The same procedure for the issuance of a certificate of the right to inheritance shall apply in the instances where the inheritable estate is devolved to the state or municipality.

Article 5.67. Time-limit for the issuance of the certificate of the right to inheritance

The successors shall be issued with the certificate of the right to inheritance upon the lapse of three months from the day of the opening of succession.

In the event of succession both by operation of law and by a will, natural persons may also be issued with a certificate of the right to inheritance before the expiry of three months from the day of the opening of succession if the notary possesses information that there are no successors apart from the persons who have applied for the issuance of the certificate of the right to inheritance.

CHAPTER VII

MUTUAL RELATIONS BETWEEN SUCCESSORS

Article 5.68. Legal status of the inheritable estate

In the event where there are several heirs, the estate inherited by them shall comprise their common divided ownership unless it is otherwise provided for by the will.

Article 5.69. Division of the inheritance

Nobody can be forced to renounce his right to the distinguishment of the portion he is entitled to from the inheritable estate. Inheritance shall be divided by a mutual agreement between the heirs.

Inheritance may not be divided:

1) until the birth of a testate or intestate successor;

2) if the testator has established by his will a time-limit during which the successors jointly possess the inherited estate. This time-limit may not exceed the period of five years from the day of the opening of succession, except in cases when there are minors among the successors. In this event the testator may prohibit division of the estate until the successor concerned reaches the age of eighteen.

Article 5.70. Methods of property division

Successors shall be able to divide the inherited estate upon their mutual agreement before the rights of successors to the things are registered in the Public Register. The division of immovable things shall be formalised by a contract attested by the notary which shall have to be registered in the Public Register. In the event of disagreement between the successors concerning the division of property, the estate shall be divided by the court upon the action brought by each of them.

Divisible things shall be divided in kind, indivisible things shall be devolved on one of the successors, taking in regard the character of the thing and the needs of the successor, while the other successors shall be entitled to the compensation of the value of the thing by other things or in money.

The whole inheritance or separate things thereof may be upon the mutual agreement of the successors sold in an auction and the amount received divided, or an auction may be held among the successors concerning separate things, where the thing shall be devolved to that successor who offers the highest bid.

The transference of individual things to concrete successors may be decided by mutually agreed way of drawing lots.

Article 5.71. Inheritance of a farmstead

In the instances where a division of a farmstead may destroy the farm, the priority right to get the farm and the inventory thereof shall be granted to the successor who has worked most in the inheritable farm and is inclined and prepared to engage into farming himself. In the event of a dispute, the court may schedule the compensation to other successors for the shares of the property belonging to them to be paid within the period of ten years by deciding to establish a mandatory hypothec for all the immovable things of such successor.

Article 5.72. Priority right of an successor to an enterprise

The priority right to get in kind an private (personal) enterprise inherited by several successors shall be awarded to that successor who himself wants and is able to manage the inherited enterprise. In this event, regard shall also be taken of the possibility of the person receiving the enterprise in kind to compensate the other heirs.

Article 5.73. Priority right of other successors to purchase an inherited farmstead

In the event where a successor, who has inherited a farmstead pursuant to Article 5.71 of this Code, sells the farmstead before the expiry of a ten-year period from the day of inheritance, priority right to purchase the farmstead shall be awarded to the other successors if the compensation provided for in Article 5.71 has not been paid to them in full. Upon the sale of the farmstead, the other successors shall obtain the right to demand immediate payment of the remaining part of the compensation.

Article 5.74. Documents

Unless the successors agree otherwise, the documents of the family and the inheritable estate shall not be divided and transferred by mutual agreement to the custody of one of the successors, or to the successor who has received the greatest share of the inheritance, and if all the shares are equal – to the eldest successor. The successor in whose custody the documents are transferred shall be obliged to allow access to them for other successors as well as enable them to make copies or extracts thereof.

The documents pertaining to an immovable thing shall be located with that successor to whom the immovable thing is devolved. In the event where an immovable thing is inherited by several successors, the documents shall be kept by mutual agreement in the custody of one of them.

Disputes related with documents shall be decided by the court taking into regard the size of the shares, use of the immovable thing, place of residence of the successors and other circumstances.

CHAPTER VIII

PARTICULARITIES IN SUCCESSION OF SEPARATE TYPES OF PROPERTY

Article 5.75. Inheritance of land

In the event where land is inherited by an heir who may not have the right of ownership of land pursuant to laws of the Republic of Lithuania, he shall be entitled only to a sum of money derived form the sale of the inherited land. The land in accordance with the certificate of the right to inheritance submitted by the heir shall be sold in accordance with the procedure established by the Government to the purchaser indicated by the heir or in an auction. The amount received shall be paid to the heir after deducting the costs of sale or the organisation of auction.

Article 5.76. Inheritance of industrial property

The right of the bequeather to a patent of invention or to a certificate of industrial design shall devolve to his successors. The rights provided by the documents of industrial property protection shall also be subject to inheritance.

Alongside with the enterprise, the successors shall also inherit the right to the name of the legal person and trade marks.

The rights and duties pursuant to licence contracts entered into by the bequeather shall devolve to the successors, they shall also acquire the right to industrial and commercial secrets (know-how), rights and duties pursuant to contracts on the transference of industrial and commercial secrets provided that these secrets are not of the character indivisible from the personality of the bequeather.

BOOK SIX

LAW ON OBLIGATIONS

PART I

GENERAL PROVISIONS

CHAPTER I

CONCEPT OF AN OBLIGATION AND ARISING OF OBLIGATIONS

Article 6.1. Notion of an obligation

An obligation is a legal relationship one party of which (debtor) shall be bound to perform for the benefit of another party (creditor) a determined action or to refrain therefrom, and the creditor shall have the right to demand from the debtor the performance of his duty.

Article 6.2. Grounds for arising of obligations

Obligations shall arise from transactions or from any other legal facts which are capable of producing obligatory relationships under the valid laws.

Article 6.3. Subject matter of an obligation

The subject-matter of an obligation may be any actions (active or passive) that are neither forbidden by law nor contrary to public order or good morals.

The subject matter of an obligation may also relate to any property, even future property provided that the property is determinate as to the kind and quantity, or can be determined according to other criteria.

The subject matter of an obligation may have a monetary or non-monetary expression, it must nevertheless meet the correspondent interest of the creditor that is protected by law.

The subject matter of an obligation cannot be something that is impossible to perform.

Article 6.4. Duties of parties to an obligation

The creditor and the debtor must conduct themselves in good faith, reasonably and justifiably both at the time the obligation is created and existing, and at the time it is under performance or extinguishment.

CHAPTER II

TYPES OF OBLIGATIONS

SECTION ONE

PLURALITY OF DEBTORS AND CREDITORS

Article 6.5. Plurality of debtors

Where an obligation is joint between two or more persons on the side of the debtor (co-debtors), they shall be obligated to perform their obligation in such a way that each of them may only be compelled to perform the obligation separately and only up to his share of the debt that is presumed to be equal to the shares of others co-debtors, except in cases provided for laws, the agreement of parties, or a court judgement.

Article 6.6. A solidary duty of debtors

A solidary obligation of debtors shall not be presumed, except in the cases established by laws. It shall arise only where it is expressly imposed by the law or stipulated by an agreement of the parties, also in the cases when the subject of the obligation is indivisible.

An obligation may be solidary even though the obligation of one of the debtors according to the conditions of its performance differs from the obligation of the others, for example, where one debtor is allowed a time-limit and the other debtor is not granted such a time-limit, or where the obligation of one debtor is not conditional while the other debtor is bound conditionally, etc.

Solidarity between debtors shall be presumed where an obligation is connected with providing of services, effectuating joint activity, or with the compensation for damage caused to another through the solidary actions of several persons.

If the debtors are solidarily liable, the creditor has the right to demand performance both from all the debtors jointly or from several of them, or from a single debtor personally, either for the whole or a part of the debt.

A creditor who has not received full satisfaction from one of the co-debtors, may apply for the remaining performance to any one of the debtors, or to all of them.

Co-debtors shall remain obligated until the obligation is performed in full .

Performance of a solidary obligation by one of the debtors shall relieve the others towards the creditor.

A creditor who receives separately and without any reserve the share of one of the co-debtors and specifies in the acquitance paper that it applies only to that share shall renounce solidarity in favour of that debtor alone.

Article 6.7. Defences of co-debtors against claims of a creditor

In the event of a solidary duty, any of the co-debtors shall be able to use against the creditor’s demand both the defences common to all debtors and personal defences. However, the debtor cannot set up defences against the creditor based on such legal relationships of other co-debtors which do not involve the debtor concerned, nor shall the debtor be able to set up such defences which can be used only personally by one or several other co-debtors.

Article 6.8. Other rights and duties of co-debtors

Each of the debtors of a solidary obligation shall have the right to accept renunciation of the right to claim granted by the creditor to him and other debtors where such renunciation applies to all the co-debtors.

Adjournment of performance of an obligation granted by the creditor to one of the co-debtors shall respectively apply to all other co-debtors to the extent that this corresponds to the intentions of the creditor.

Where a creditor renounces solidarity in favour of one of the co-debtors, he shall retain his solidary remedy against the other co-debtors for the whole debt.

Any loss arising from insolvency of a co-debtor shall be equally divided between the other co-debtors, except in the cases when their shares in the obligation are not equal.

Article 6.9. Recourse between co-debtors

A co-debtor who has performed the solidary obligation shall have the right to recover within the procedure of recourse from his co-debtors their respective shares that correspond to the equal portions from the performed, with his participatory share deducted unless otherwise provided for by laws or agreement. Any loss, expressed in anything unpaid to the debtor who has performed the solidary obligation arising from the insolvency of one of solidary debtors shall fall in equal participatory shares on the remaining co-debtors, except in the cases when their shares in the obligation are not equal.

If a solidary obligation is of non-monetary nature, in the case of recourse, a monetary compensation must be paid to the debtor who has performed the whole solidary obligation by the other co-debtors.

The rules provided for in the preceding Paragraphs of this Article shall also apply to the apportionment between the co-debtors of the expenses of performance of a solidary obligation.

A co-debtor against whom a claim was brought shall be able to involve the same defences that might have been set up against the creditor at the time of arising of the claim, as well as other defences, except those which are based on exceptionally personal relationships between the co-debtor and the other co-debtor who has not filed a counter claim.

If the obligation was contracted exclusively in the interest of one of the co-debtors, or if it is not performed due to the fault of one of the debtors alone, the debtor concerned shall be liable for the whole debt to the other co-debtors who shall then be considered in his regard as his sureties.

Article 6.10. Divisibility of a solidary duty and solidary claim between the heirs of the parties to obligation

1.Unless otherwise provided for by laws or agreed, the solidary obligation of a debtor shall be divided after his death between his heirs in accordance with the rules established in Book Five of this Code, except in the instances where the obligation is indivisible.

The provision established in Paragraph 1 of this Article shall also apply in the case where the creditor’s claim is solidarity.

Article 6.11. Influence of novation upon solidary duty

A novation between the creditor and one of the co-debtors shall discharge the other co-debtors towards the creditor from the performance of a solidary duty, except in cases established by laws or a contract. Where a novation is clearly related only with the share of one of the co-debtors, other co-debtors shall be released from the performance of the duty only in respect of the portion of that co-debtor.

Article 6.12. Acknowledgement of a solidary debt and the right of solidary claim

If a debt is acknowledged by one of the co-debtors, this acknowledgement shall also apply to all other co-debtors.

If the right of claim is acknowledged to one of the creditors with the right of solidary claim, this acknowledgement shall apply to all other co-creditors.

Article 6.13. Merger of a debtor and a creditor

Where an obligation is solidary and the qualities of a co-debtor and a creditor are combined in the same person, the obligation of the other solidary debtors shall be extinguished in respect to the share of that co-debtor.

The rule established in Paragraph 1 of this Article shall also apply in the cases of the right of solidary claim.

Article 6.14. Power of a court judgement in the case of solidary duty

A court judgement rendered in the case of dispute between the creditor and one of the solidary debtors shall also have effect against the other co-debtors.

The other co-debtors shall be able to invoke the judgement mentioned in Paragraph 1 of this Article as a defence against the claim of the creditor unless such judgement is based on exclusively personal relationships between that debtor alone and the creditor.

An action instituted against one of the solidary debtors shall not deprive the creditor of the right to bring an action against the other co-debtors, but the debtor sued shall have the right to demand the impleader of the other solidary debtors.

Article 6.15. Non-performance of an obligation in the case of a solidary duty through the fault of one of the co-debtors

Where the performance of an obligation has become impossible through the fault of one of the solidary debtors, the other co-debtors shall not be released from liability for non-performance of the solidary obligation.

Where the performance of an obligation in kind has become impossible, or the time-limit of its performance is forfeited through the fault of one or more of the solidary debtors, the other co-debtors shall not be released from their duty to compensate for damages to the creditor, though they shall not be liable for any additional damages which may be incurred by him. The creditor shall be able to claim additional damages only from those co-debtors through whose fault the obligation became impossible to be performed, or through whose fault the forfeiture of performance occurred.

Article 6.16. Prescription of a solidary obligation

Actions by which prescription is interrupted with regard to the relationships between the creditor and one of the solidary debtors shall be equally effective in regard to the relationships between the creditor and other co-debtors. The same rule shall apply in the event of solidarity between creditors.

Suspension of prescription with regard to one of the solidary debtors shall have no effect on the other co-debtors. The same rule shall apply in the case of solidarity between creditors. However, the debtor who has been required to perform the obligation shall have the right of recourse against the co-debtors who were discharged by prescription.

A refusal to demand the application of prescription made by one of the solidary debtors shall have no effect with regard to the other co-debtors. If such refusal is made only in favour of one of the solidary creditors, it shall also benefit the other co-creditors. A solidary debtor who has refused to demand the application of prescription shall have no right of recourse against the other co-debtors discharged by the extinct prescription.

Article 6.17. Solidarity among creditors

Where an obligation is joint between two or more creditors, each creditor may only demand the performance of an equal share, except in the cases provided for by laws or an agreement of the parties.

Article 6.18. A solidary claim of creditors

1.Solidarity between creditors may be established by laws or agreement of the parties, i.e. it shall entitle each of the creditors to claim from the debtor for the whole performance of the obligation or a part thereof. The claim shall also be deemed to be solidary where the subject matter of the obligation is indivisible.

The debtor shall have no right to set up defences against the claim of one of the co-creditors that are based on such personal legal relationships of the debtor in which the creditor concerned does not participate.

Performance of the whole duty in favour of one of the solidary creditors shall release the debtor from the performance towards the other creditors.

A solidary creditor who has received the whole performance of the obligation from the debtor shall be bound to compensate the portion of each another co-creditors unless otherwise stipulated by their interrelations.

Article 6.19. Possibility of choice of creditor for performance

A debtor shall have the option of performing the obligation in favour of any of the solidary creditors, provided that he has not been sued by any of them.

Article 6.20. Influence of novation on a solidary claim

The novation of one of the solidary creditors and a debtor shall be effective only to that creditor’s share and cannot be used with respect of the other solidary debtors.

Article 6.21. Renunciation of the right to claim

If the remission from the right to claim is made by one of solidary creditors, it shall release the debtor from performance of a solidary obligation only in respect of the share the performance of which can be claimed by the remitting creditor.

The remission provided for in Paragraph 1 of this Article shall not release the solidary creditors from the settlements between themselves.

Article 6.22. Power of a court judgement in the case of solidary claim

A judgement rendered in the dispute between one of the solidary creditors and the debtor shall have effect against the other solidary creditors.

The other creditors can avail themselves of the court judgement against the debtor to the extent that it is related to the debtor’s defences he can set up against each of the solidary creditors.

Article 6.23. Renunciation of a claim

A creditor who refuses from a claim in favour of one of the co-debtors shall retain his right of solidary claim against the others co-debtors.

The solidary claim of the creditor in regard of one of the co-debtors shall terminate if the creditor:

1) without any exceptions acknowledges that one of the co-debtors has paid his share;

2) has filed an action against the debtor as to his share only, and the latter has assented to such action, or if a court judgement satisfying the creditor’s claim has been passed.

If a creditor has renounced a solidary claim in respect of one of the co-debtors, and one of the other co-debtors has become insolvent, the share of such insolvent co-debtor shall be divided between all the solidary debtors, except the portion of the co-debtor in whose favour the renunciation of solidary claim is made.

SECTION TWO

DIVISIBLE AND INDIVISIBLE OBLIGATIONS

Article 6.24. Divisible obligations

An obligation shall be divisible unless it is expressly stipulated by law that it is indivisible, or unless the subject matter of the obligation, owing to its nature, is not susceptible to division either materially or abstractly.

If an obligation is divisible, and if there is more than one debtor or more than one creditor though the obligation is not solidary, each of the creditors may claim the performance only of his share of the debt, while each debtor shall be bound to perform only his share of the debt.

The heir of the debtor who has been charged with rendering the performance or who is in possession of the property subject matter of the obligation, shall have no right to claim for division of performance of obligation.

An obligation of one debtor to one creditor may be performed between them only as an indivisible one, though this obligation shall become divisible between the heirs of the parties to the obligation, except where it is indivisible.

Article 6.25. Indivisible obligations

An obligation shall be indivisible if the subject-matter of the obligation, owing to its nature, is not susceptible of division, or if the parties have agreed on such mode of performance which renders the obligation impossible to be performed in shares.

Indivisibility of an obligation means that it shall not be susceptible of division either between the creditors, or the debtors, or between their heirs.

A stipulation of solidarity of an obligation made by the parties thereof shall not render it indivisible.

Each of the debtors of an indivisible obligation or his heir may separately be obligated to perform the whole obligation, and each of the creditors of an indivisible obligation or his heir may claim the performance of the whole obligation even though the obligation is not solidary.

Where a heir of the creditor claims satisfaction of the whole performance, he shall be obliged to secure the protection of the interests of co-heirs.

SECTION THREE

ALTERNATIVE OBLIGATIONS

Article 6.26. Concept of an alternative obligation

An obligation shall be alternative where the debtor is charged with performance of one of two or more different actions (principal prestations) in his own choice or chosen by the creditor or a third person. The performance of either of the chosen prestations shall fully discharge the debtor.

The debtor may not demand the creditor to accept a part of the performance in one prestation and the other part in another.

An obligation shall not be considered alternative if at the time of its arising one of the two possible prestations could not be the subject-matter of that obligation.

In the event where a person who has the right of choice chooses a concrete action of performance (prestation), an alternative obligation shall become simple.

Article 6.27. The right of choice

In an alternative obligation the choice of the prestation shall belong to the debtor unless it has been granted to the creditor or a third person by laws, contract or a court judgement .

A choice shall become irrevocable from the moment of performance of one chosen prestation, or when the choice is communicated to the other party, or to both parties in the event where the choice belongs to a third person.

If the right of choice belongs to one of the parties of obligation and this party fails to exercise it within the allotted time, the right of choice shall pass to the other party. The right of choice cannot pass to the creditor until he acquires the right to claim for performance, and to the debtor, until his duty to perform the obligation arises. If the choice of a concrete prestation is referred to a third person and he fails to exercise it, it shall be determined by the court.

A time-limit for the realisation of the right of choice can be established by an agreement of the parties. In the event where such time-limit is not established, it can be fixed by the party who is not granted the right of choice. Such time-limit must be reasonable.

In the event where the right to claim is pledged and the impossibility of performing an obligation is caused by the failure to chose a concrete action of performance, the pledgee may establish a time-limit for both parties to the obligation within which the choice of a concrete prestation must be made. If the choice of a concrete prestation is not made within the established time-limit, the right of the choice shall pass to the pledgee.

Article 6.28. Impossibility of performing of an alternative obligation

In the event of one of the several prestations being impossible from the very arising of the obligation, or it becoming such after the arising of the obligation, the obligation shall be performed by the acceptance of the remaining prestation.

The rule established in Paragraph 1 of this Article shall not apply if one of the prestations becomes impossible to perform due to the circumstances responsibility for which is borne by the party without the right of choice of performance. In this event, the debtor shall be liable for the non-performance of the obligation.

In the event where the debtor had the right of choice and one of several kinds of prestation became impossible to be performed not through his fault, the debtor shall be obliged to perform the obligation in the remaining prestation.

Where the debtor is granted the right of choice and all of the prestations become impossible to be performed due to his own fault, the debtor shall be liable to the creditor to the extent of the last prestation remaining.

In the event where all the prestations become impossible without the fault of the debtor, the obligation shall be deemed to be extinguished.

Where the creditor is granted the right of choice, and if one of the prestations becomes impossible to be performed, the creditor shall be obliged to accept performance in other prestations. If one of the prestations becomes impossible to be performed due to the fault of the debtor, the creditor shall have the right to claim performance in kind by choosing other prestations, or to claim compensation of damage resulting from the non-performance of the obligation by the prestation that has become impossible. In the event where the obligation is not possible to be performed in any of the several prestations due to the fault of the debtor, the creditor shall have the right at his choice to claim compensation for the damages resulting from the impossibility of one or another of the prestations.

Article 6.29. Facultative obligation

A facultative obligation is an obligation which has only one principal subject-matter (prestation), though in the event of the obligation being impossible to perform in the principal prestation, it may be realised in another performance that does not contradict to the principal one.

The debtor shall be discharged from performing the obligation if the principal prestation without his fault becomes impossible to perform, and the obligation cannot be performed in another prestation that does not contradict the principal one.

SECTION FOUR

CONDITIONAL OBLIGATIONS

Article 6.30. Concept of a conditional obligation

An obligation is conditional where its arising, modification or extinction is made dependent on whether or not a certain circumstance occurs in the future.

The conditional nature of an obligation shall not prevent the rights that arise from it being alienable and inheritable.

The conditional obligations may be suspensive term or resolutory term. In such case, Article 1.66 of this Code shall apply.

An obligation shall not be deemed to be conditional if its extinction depends on an event that, unknown to the parties, had already occurred at the time when the debtor accepted the conditional obligation.

The obligation whose arising depends upon a condition that is at the absolute discretion of the debtor shall be null and void. However, if the condition consists of exercising or not exercising appropriate actions, the obligation shall be valid even where the exercising or not exercising the action is at the sole discretion of the debtor.

Article 6.31. Requirements for a condition

A condition shall have to be lawful and not contrary to the public order and good morals.

A condition can be only such circumstance, the existence or non-existence of which is possible.

A condition which is unlawful, contrary to the public order or good morals, or which is impossible shall be null and void, and shall render the obligation which depends upon it null and void.

Article 6.32. Time-limits for fulfilment or non-fulfilment of a condition

In the event where no time-limit has been fixed for the fulfilment of a condition, the condition may be fulfilled at any time. If it becomes certain that the condition may not be fulfilled at all, it shall be deemed to be not fulfilled.

Where the arising, modification or extinction of an obligation is dependent upon a condition that certain circumstances will not occur within a given time, the condition shall be considered having occurred once the determined time has elapsed without the certain circumstance having occurred, also when before the elapse of the time it becomes certain that the circumstance is not bound to occur altogether.

Where no time-limit has been fixed, the condition shall not be considered fulfilled until it becomes certain that the circumstance will not occur.

SECTION FIVE

OBLIGATIONS WITH A TERM

Article 6.33. Types of termed obligations

Obligations may be suspensive or resolutory.

An obligation with a suspensive term shall be an existing obligation that is not performed until the expiry of a certain time-limit, or until the occurrence of a certain circumstance. In this event, its performance may not be demanded before the expiry of the term; however, anything performed freely and without error before the expiry of the term may not be recovered.

An obligation with a resolutory term is an obligation whose duration is fixed by laws or agreements of the parties and which is extinguished by the expiry of the fixed term.

Article 6.34. Fulfilment of obligations with a term

In the event of non-occurrence of a circumstance in the case of an obligation with a suspensive term, the obligation shall become exigible from the day on which that circumstance should normally have occurred.

Anything that is due upon a term may not be exacted before the term expires. However, everything performed freely and without error before the expiry of the term may not be recovered.

Article 6.35. Determination of a term

A term may be determined by laws, agreement of parties or a court judgement.

If the parties have agreed to postpone the determination of the term, or to delegate it to be determined by one of the parties, but no term has been determined, the term shall be fixed by the court upon the application of one of the parties taking into account the nature of the obligation and the circumstances of the case. In urgent cases, the term may be fixed by one of the parties. In any event, the term must be reasonable.

In the event where a fixed term is required by the nature of the obligation, and it has not been determined by the parties, the term may be fixed by the court.

It shall be presumed that a term is determined for the benefit of the debtor unless otherwise established by laws or the contract, also where taking into consideration the essence and nature of the obligation, it becomes clear that the term has been stipulated for the benefit of the creditor, or both of the parties. The debtor shall lose his privileges in respect of the term if he becomes insolvent, is declared bankrupt or without the consent of the creditor reduces or destroys the security of performance of the obligation submitted, also if the debtor fails to meet the conditions in consideration of which the privileges were granted to him.

The party for whose benefit the term has been determined may renounce it without the consent of the other party. Renunciation of the benefit of the term renders the obligation exigible immediately.

When one of the parties renounces the benefit of the term, or loses the right to the benefit of the term, the other party shall acquire the right to demand immediate performance of the obligation.

SECTION SIX

MONETARY OBLIGATIONS

Article 6.36. Currency of monetary obligations

Monetary obligations (debts) must be expressed and paid in the currency which in accordance with the valid laws is lawful tender in the Republic of Lithuania.

Monetary obligations may be paid within the order established by laws by means of bank-notes (coins), cheques, bills of exchange, transfer of funds, credit cards or by any other lawful tenders.

Where an action is brought in the Republic of Lithuania for the recovery of a sum of money expressed in a foreign currency, the creditor may at his choice demand payment in the foreign currency, or the equivalent in the national currency of the Republic of Lithuania at the rate of exchange at the day of the actual payment.

Where the monetary obligation is indicated in a currency which is not lawful tender, the money paid by the debtor to perform the obligation shall have to be lawful tender and correspond to the rate of exchange of the currency valid at the time and in the place of actual payment.

In the event where the debtor exceeds the time-limit fixed for the fulfilment of the obligation and fails to pay on the day of maturity, and if after the day concerned the currency in which the sum of money is due is depreciated because of the change in exchange rates, the debtor shall be obliged to pay an additional amount equivalent to the difference between the rate of exchange at the date of maturity and the date of actual payment. This rule shall not apply if the failure of the debtor to perform the obligation is conditioned by the fault of the creditor. The debtor shall bear the burden of proof of the circumstance indicated above.

The provisions of Paragraph 5 of this Article shall not apply if the rule established in Paragraph 1 of this Article has been violated.

Article 6.37. Interest on monetary obligations

Interest on obligations may be fixed by laws or agreements of the parties.

The debtor shall also be bound to pay a certain interest established by laws on the sum adjudged to the creditor for the period from the moment of the commencement of the case in the court until the final execution of the judgement.

In the event where the interest is established by laws, the parties may agree in writing upon a higher interest providing that such agreement is not contrary to laws or the principles of good faith and reasonableness. Non-observance of the written form shall be the grounds for the application of the interest established by laws.

It shall be prohibited to calculate interest on the interest calculated previously (double interest), except in the cases established by laws or agreement of the parties if such agreement is not contrary to the requirements of good faith, reasonableness and justice.

CHAPTER III

PERFORMANCE OF OBLIGATIONS AND LEGAL EFFECTS OF THEIR NON-PERFORMANCE

SECTION ONE

GENERAL PROVISIONS

Article 6.38. Principles of performance of obligations

Obligations must be performed in good faith, properly and without delay, pursuant to the requirements indicated in laws or the contract, and in case of absence of relevant requirements, obligations must be performed in accordance with the criteria of reasonableness.

In the event where the performance of an obligation is inherent in the exercise of professional activity of one of the parties, the requirements with respect to the nature of that professional activity shall also have to be observed by the party concerned.

Each of the parties shall be obliged to perform his obligations in the thriftiest way possible and render every kind of assistance to the other party in performing his obligations (obligation of the parties to co-operate).

If the debtor in performance of the obligation uses assistance of other persons, he shall be liable for the actions of those persons as for his own.

Article 6.39. Manner of performance of an obligation

A debtor may not without the consent of the creditor free himself from the obligation by a performance different from that which is foreseen in the contract or laws, notwithstanding the value of the performance.

Where the creditor has consented to accept a different performance, the obligation shall be deemed to be extinguished.

The counter-duties of the debtor and creditor must be performed by them concurrently unless otherwise provided for by laws, the contract, or the essence of the obligation.

Article 6.40. Partial performance of an obligation

The creditor shall have the right to refuse accepting a partial performance of an obligation unless otherwise provided for by laws or the contract.

In the event where the debtor disputes a part of an obligation, he shall be obliged to accept the performance of that part of the obligation which is not disputed. However, the creditor shall reserve the right to demand performance of the remaining part of the obligation.

Article 6.41. The quality of performance of an obligation

When the subject-matter of an obligation is a thing specified only as to the kind, the debtor must deliver a thing of the same kind, but not below the average in quality required for the kind concerned unless otherwise provided for by laws or a contract.

When the subject-matter of an obligation is an individually specified thing, the debtor shall be liable for any worsening of the quality of that thing if such worsening occurs through his own fault.

Article 6.42. Furnishing security of performance of obligation

Any person bound to furnish security of performance of an obligation which is not specified by the contract as to the manner or form, shall have the right at his own discretion to choose concrete means of security adequate to the essence of the obligation or a form of security established by laws.

Article 6.43. Duty to safeguard

An obligation to deliver an individually specified thing shall include the duty to safeguard it until delivery unless otherwise provided for in the contract.

Article 6.44. The person to whom the performance must be made

The obligation must be performed to the creditor, or to his representative, or to the person designated by the creditor, or to the person obliged by laws or the court to accept such performance.

Performance of an obligation made to a person not entitled to accept it shall be deemed to be an appropriate performance if the creditor ratifies it or factually obtains the full performance from the person concerned.

Performance of an obligation shall not be deemed to be carried out in a proper way if the debtor, in the course of its effectuation in respect of one of his creditors, infringes the interests of his other creditor who is granted the right to demand the arrest of the property of the debtor.

Article 6.45. Performance of an obligation to an erroneous creditor

The debtor who performs an obligation to a person who through the fault of the creditor is reasonably and in good faith deemed to be entitled to receive the performance, shall be discharged from the performance of obligation to the creditor if he proves to have erred in good faith.

The erroneous creditor who has accepted performance shall be obliged to restore it to the true creditor or to the debtor in accordance with the rules of Chapter XX of this Book.

Article 6.46. Suspension of performance of an obligation

The debtor shall have the right to suspend performance upon substantial and reasonable grounds for doubt whether the person in respect to whom the obligation is being performed has the right to accept this performance, and if the latter upon the demand of the debtor fails to present the necessary proof of his right to claim.

The debtor shall also have the right to suspend performance of the obligation if the creditor fails to perform his counter-obligation and where the counter-obligations of the debtor and creditor are connected in such a manner which justifies the suspension of the performance of the obligation.

The debtor shall have no right to suspend performance of the obligation where the creditor cannot perform his obligation through the fault of the debtor himself, likewise when the creditor cannot perform his obligation due to circumstances beyond his control.

Article 6.47. Performance of an obligation to an incapable creditor or to a creditor who had no right to accept the performance personally

Performance made to a creditor without capacity to accept it shall be valid only to such extent if the debtor proves that the performance truly conforms to the best interests of the incapable person and is to the advantage thereof.

Where the obligation is performed without considering that the creditor due to certain reasons (arrest, etc.) was unable to accept the performance personally, the debtor shall be bound to perform such obligation anew and shall have the right of recourse against the creditor to demand the return of what has already been transferred.

Article 6.48. Incapacity of a debtor

If the obligation is performed by an incapable debtor, such performance cannot be disputed upon the grounds of the debtor’s incapacity.

Article 6.49. Performance made with the property of another

The debtor cannot dispute performance of an obligation made by the transfer of property he had no right to dispose of, except in the cases when he himself offers to make performance by a transfer of property he has the right to dispose of, and if such change of prestation does not violate the interests of the creditor.

The creditor to whom the property of another has been transferred by the debtor in performance of an obligation shall have the right to dispute such performance and claim damages.

Article 6.50. Right of a third person to perform an obligation

An obligation can be performed in part or in full by a third person, except in the cases when pursuant to the agreement of the parties, or the essence of the obligation, it must be performed by the debtor personally.

The creditor may refuse acceptance of the performance offered by a third person if the debtor has notified him of his objection to such performance, except in the case established in Paragraph 1 of Article 6.51 of this Code.

The third person who has performed the obligation shall acquire the rights of a creditor in respect to the debtor.

Article 6.51. The right of a third person to perform an obligation for the debtor

Where the exaction against the property of the debtor has been taken by the creditor, the claim of the creditor may be satisfied by third persons who by the reason of such exaction may be deprived of certain rights to that property. The same right shall belong to the person who possesses the property if by the reason of exaction the right of possession may be lost by him.

A claim of the creditor may also be satisfied by depositing the money into the depository account of a notary, a bank or any other credit institution, or by setting-off counter claims.

Article 6.52. Place of performance of an obligation

An obligation shall be performed at the place expressly indicated in the contract or laws, or which may be inferred from the essence of the obligation.

In the event where no place of performance is indicated, the following rules shall apply:

1) the obligation to deliver an individually specified thing shall be performed at the place where the thing was situated when the obligation arose;

2) the obligation to deliver an immovable thing shall be performed at the place where the thing is situated;

3) the obligation to deliver a thing specified as to the kind shall be performed at the place of residence or business of the debtor;

4) a monetary obligation shall be performed at the place of residence or business of the creditor at the time of maturity of the obligation. In the even of change of place of residence or business of the creditor since the time of the arising of the obligation, which has caused additional expenses of performance to the debtor, the creditor shall be bound to compensate the debtor for such additional expenses. Upon the request of the creditor, a monetary obligation may also be performed in the territory of another state where the place of residence or business of the creditor is located at the time of payment, or the state where the creditor’s residence was at the time when the obligation arose. However, where the required performance would be rendered substantially more onerous in the consequence, the debtor may refuse to satisfy such requirement of the creditor and execute performance in the place of the creditor’s residence or his business at the time when the obligation arose;

5) all other obligations shall be performed in the place of the debtor’s residence or business at the time of maturity of the time-limit for the performance of the obligation.

Article 6.53. Time-limit for performance of an obligation

If the time-limit for the performance of an obligation is not established, or it is determined by the moment of demand to perform the obligation, the creditor shall have the right to demand it at any time, and the debtor shall have the right to perform the obligation at any time. Though, when a certain time-limit is necessitated by the nature of the obligation, the manner or place of its performance, it may be fixed by the court upon the demand of one of the parties.

The obligation whose time-limit of performance is not determined, must be performed by the debtor within seven days from the day when the creditor requested the performance unless a different time-limit of performance results from laws or the essence of the contract. In such cases, the time-limit for performance must be reasonable and enable the debtor to perform the obligation properly.

The debtor shall have the right to perform the obligation before the expiry of the time-limit determined for its performance unless this is prohibited by laws, the contract, or is contrary to the essence of the obligation.

Article 6.54. Imputation of payments

Unless otherwise agreed by the parties, payments received by the creditor in result of performance of an obligation shall be imputed first to the creditor’s expenses related with the tender.

Second in line payments shall be imputed to interests in accordance with the sequence of their maturity.

Third in line payments shall be imputed to a penalty.

Fourth in line payments shall be imputed to the performance of the principal obligation.

A creditor shall have the right to reject an offer to pay if the debtor indicates a different order of imputation than established in Paragraphs 1, 2, 3 and 4 of this Article.

A creditor may reject full repayment of the principle obligation if the current interest at maturity is not paid at the same time.

Article 6.55. Imputation of payments in the event of several debts

A debtor who owes several debts of the same kind to the same creditor may declare at the time of payment which debt he intends to satisfy. Though the debtor shall have no right without the consent of the creditor to impute a payment to an obligation not yet due in preference to a debt at maturity.

In the absence of such declaration of the debtor, or a different agreement between the parties, it shall be considered that the payment is imputed first to the debt at maturity. In the event of several debts at maturity, where none of them is secured, it shall be considered that the payment shall is imputed to the debt that was the first to reach maturity. Where several debts are due, it shall be considered that the payment is imputed to the one having the security. Among several secured debts, the payment shall be imputed first to the debt which is most burdensome to the debtor, and in the event of all the debts being equally burdensome, to the one that was the first to reach maturity. In the instances where none of these criteria may be applied, imputation shall be made in proportion to all the debts.

The rules of this Article shall also apply when the debtor’s obligation to the creditor consists of the supply of goods or services, to the extent that this does not contradict to the essence of the obligation.

Article 6.56. Performance of obligation by payment to a deposit account

The debtor has the right to perform a monetary obligation by depositing the debt into the deposit account of a notary, a bank or any other credit institution if:

1) the creditor or any other person authorised to accept the performance cannot be found at the place where the obligation is to be performed;

2) the creditor is incapable and a guardian is not appointed to him;

3) the creditor avoids accepting the performance of the obligation;

4) the creditor is not clear, as the right to accept the performance is being disputed by several persons.

A deposit of the sum necessary for the performance of an obligation into a deposit account indicated in Paragraph 1 of this Article shall be considered a proper performance of the obligation.

A notary, a bank or any other credit institution, into account of which the money is deposited, shall be obliged within a reasonable time to inform the creditor accordingly.

Where the subject-matter of an obligation is a thing, and the creditor refuses to accept performance, the debtor shall be obliged to make a tender and determine the time-limit for the acceptance of performance. In the case of the creditor’s failure to accept performance of the obligation within the established time-limit, he shall be considered to be in default. In this event, the creditor shall bear the costs of the preservation of the thing. The creditor shall also bear the risk of loss or deterioration of a thing. If a thing is perishable, the debtor may sell it and deposit the proceeds. These rules shall also apply within the conditions specified in Paragraph 1 of this Article, with the exception of tender.

Performance of an obligation in accordance with the rules provided for in this Article shall release the debtor from the payment of interest or any other dues in the future.

Interest, or any other sums calculated from the day of deposit shall be due to the creditor. However, if the deposit is made to obtain performance of the obligation of the creditor that is correlative to the obligation the debtor intends to perform by the deposit, the received interest and other sums shall belong to the debtor until the deposit is accepted by the creditor.

The deposited sums of money may be withdrawn by a debtor as long as the performance has not been accepted by the creditor. If the debtor withdraws the deposited sums from the deposit account, he shall not be considered to have performed the obligation. Where the deposit of a sum of money is made during judicial proceedings, the debtor may withdraw such deposited sum only upon the authorisation of the court. In addition, the withdrawal may not be effectuated by the debtor if this would impair the rights of third persons, or the interests of solidary debtors or sureties.

In the event of bankruptcy, monetary means accumulated in the deposit account shall not be calculated into the asserts of the bank or of any other credit institution from which the claims of the creditors are satisfied under the procedure of bankruptcy.

Article 6.57. Expenses of performance of an obligation

The expenses related with the performance of an obligation shall be charged to the debtor unless otherwise provided for by laws or a contract.

Article 6.58. Right of suspension of performance of obligation

1.Where the contractual obligation is counter-performed, and the party who is the first to make actions of performance fails to perform his obligation, or where it is evident that the party will delay the performance of the obligation, the other party shall have the right to suspend the performance of his counter-obligation, or refuse to perform it altogether, inform of this the other party, and claim damages.

No right of suspension shall exist where:

1) the other party produces adequate security of performance of his obligation and this will not bring about groundless delay of performance of the obligation;

2) the performance of the obligation of the other party is impossible for the reason beyond the control thereof;

3) the performance of the obligation of the other party is prevented by the fault of the opposite party.

In the event of a contractual obligation being not performed in full by one of its parties, the other party shall also have the right to suspend the counter-performance of his obligation, or to refuse performance to the degree correspondent to that non-performed by the party obliged to perform first.

Where a party performs his counter-obligation before the party who is to perform first, the latter shall be bound to perform his obligation.

The right to suspend performance of a bilateral obligation shall become extinct when the other party to the obligation presents adequate security for the performance of his obligation.

The right to suspend performance of any obligation may also be invoked against the creditors of the other party to the obligation.

The right of suspension of performance of an obligation must be used by the parties in good faith and reasonably.

SECTION TWO

LEGAL EFFECTS OF NON-PERFORMANCE OF AN OBLIGATION

Article 6.59. Inadmissibility of unilateral refusal of performance of an obligation

None of the parties may unilaterally refuse performance of his own obligation or modify the conditions of performance thereof, except in the cases provided for by laws or a contract.

Article 6.60. Consequences of non-performance of an obligation to deliver an individually determined thing

1.Where a debtor fails to perform the obligation to deliver an individually determined thing to the creditor’s ownership or possession thereof by the right of trust or use, the creditor shall have the right to demand that thing to be delivered. This right shall become extinct upon the thing concerned being handed over to another creditor with the same kind of right. Until the thing is not handed over, the priority to receive it shall belong to the creditor in whose favour the obligation arose first of all, and in the event where it is impossible to be ascertained, to the creditor who was the first to bring the action. The creditor who cannot avail himself of the right to force the performance of the obligation in kind, shall be entitled only to compensation of damages.

In the event where a penalty is foreseen by the contract, the creditor shall have the right within his choice to claim either payment of the penalty, or deliver of the individually determined thing.

Article 6.61. Effects of non-performance of an obligation to do a certain work

In the event where a debtor fails to perform an obligation that entails doing a certain work, the creditor shall have the right to perform that work himself at the debtor’s expense within a reasonable time and for a reasonable price unless otherwise established by laws or a contract, or he may claim damages. In these instances, the creditor shall have the right to file a suit and demand the creditor to pay in advance the amount necessary for performing the work.

In the event where a debtor fails to perform an obligation that entails performing a certain work or actions which can be performed exclusively by the debtor personally, the court may upon the demand of the creditor exact a fine from the debtor in favour of the creditor. The amount of the fine shall be determined by the court. The fine may be exacted in a lump sum, or payable for every delayed day until the full performance of the obligation by the debtor.

Paragraph 2 of this Article shall not apply in the instances where the violated rights of the creditor can be defended by other forms of protection of rights, likewise where the performance of the obligation was rendered impossible not through the fault of the debtor.

Article 6.62. Liability for non-performance of an obligation arising from a bilateral contract

1.Where the performance of an obligation that arises from a bilateral contract has become impossible for the cause not imputable to any of the parties, while neither laws nor a contract provides otherwise, none of the parties may require each other performance of the contract. In such case, each party shall have the right to claim restitution in kind without the corresponding counter-performance.

Where the performance of an obligation that arises from a bilateral contract has become impossible because of a circumstance imputable to this party himself, while neither laws nor a contract provides otherwise, the other party may revoke the contract and claim restitution in kind (to return everything that was performed), likewise compensate damages incurred by the non-performance of this obligation.

Where the performance of an obligation that arises from a bilateral contract has become impossible due to circumstances imputable to the other party, the first party shall have the right to demand from the other party performance of the obligation and compensation of damages, including what has been accumulated due to the impossibility to perform the obligation.

Article 6.63. Cases in which a debtor is considered to be in default

A debtor shall be considered to be in default where:

1) the conditions of a contract are not performed, or are being performed improperly;

2) the debtor fails to perform the obligation within the established time-limit;

3) the creditor with valid reason files a suit against him, or addresses him in an extra-judicial demand to perform the obligation;

4) the creditor demands performance of the obligation within a reasonable time established by him, but the debtor failed to perform the obligation within this time-limit;

5) the debtor informs the creditor before the expiry of a time-limit of his intention not to perform the obligation;

6) performance of the obligation has become impossible due to the debtor’s fault.

The debtor shall be liable from the moment he is considered to be in default for any damages suffered by the creditor, except in the cases when the debtor is released from the performance of the obligation.

In the event where the time-limit for the performance of an obligation is not fixed, the debtor shall be considered to be in default from the moment when the creditor made a demand in writing to perform the obligation and fixed the time-limit for the performance, but the debtor has failed to perform the obligation within that time-limit.

The debtor shall be liable for all the consequences of the impossibility to perform the obligation after it was violated by the debtor, except in cases where the performance of the obligation has been rendered impossible through the fault of the creditor.

After the violation of an obligation committed by the debtor, the creditor shall have the right to refuse acceptance of the tender offered by the debtor if the debtor does not concurrently offer compensation of damages sustained by the creditor in the result of the violation of obligation.

Article 6.64. Cases when the creditor is considered to be in default

The creditor shall be considered to be in default when:

1) the debtor cannot perform the obligation in the result of insufficient co-operation between the creditor and the debtor, or through any other fault of the creditor;

2) the creditor through his own fault fails to perform his duty to the debtor, thus the debtor justifiably suspends performance of the obligation.

In the event of default of the creditor, the debtor can file a suit and demand to be released from the performance of the obligation in whole or in part, conditionally or unconditionally.

If the creditor violates the obligation, the debtor shall be considered not to have violated it. The debtor may not be considered in violation of the obligation as long as the creditor is considered to have violated it.

The debtor shall have the right to demand compensation for the damages incurred in the result of the violation of obligation committed by the creditor.

Article 6.65. Confirmation of performance of an obligation

Unless otherwise stipulated by the contract, the creditor, upon accepting the performance of an obligation, shall be obliged to issue to the debtor a quittance indicating to what extent – in part or in full – the performance has been made.

In the event where the creditor has documentary evidence of the debt issued by the debtor, he shall be obliged upon accepting the full performance of the obligation to remit this documentary evidence to the debtor, or failing that, inscribe the relevant annotation in the quittance. An inscription in the documentary evidence of the debt about the performance of the obligation shall be equalled to a quittance. If the performance does not cover the entire debt, or the creditor still needs this document for the exercise of other of his rights, he shall have the right to retain it, though he must issue a quittance to the debtor.

If the creditor refuses to issue a quittance, to remit the documentary evidence of the debt, or to inscribe in the quittance annotation about the impossibility to remit that document, the debtor shall have the right to suspend the performance of his obligation until the document confirming the performance of the obligation is issued to him.

Where several actions must be performed by the debtor successively, a quittance for the two last actions shall create the presumption that the previous actions have also been performed, except in the cases where a contract or a quittance provides for otherwise.

5. If the creditor issues a quittance for the principal sum, it shall be presumed that the interest and other costs have also been paid by the debtor.

CHAPTER IV

DEFENCE OF INTERESTS OF A CREDITOR

Article 6.66. Right of a creditor to dispute transactions made by a debtor (Paulian action)

A creditor shall have the right to challenge transactions made by a debtor, where the debtor was not bound to make them and where they violate the rights of the creditor, while the debtor knew or ought to have known that prejudice to the creditor would result from that transaction (Paulian action). The creditor’s rights shall be considered violated if by such transaction the debtor renders himself insolvent or by which, being insolvent, he grants preference to another creditor, or the rights of the creditor are infringed in any other way.

A bilateral transaction may be annulled on the ground established in Paragraph 1 of this Article only in the case when the third person concluding the transaction with the debtor concerned was in bad faith, i.e. he knew or ought to have known that the transaction violates the rights of the debtor’s creditor. A gratuitous transaction may be annulled irrespectively of whether the third person is in good or bad faith.

The creditor shall have the right to bring an action upon the annulment of the transaction on the ground provided in Paragraph 1 of this Article within one year prescription. This time-limit shall be calculated from the day on which the creditor learned or ought to have learned of the transaction which violates his rights.

The annulment of the transaction shall have legal effects only in respect of the creditor who brought the action upon the annulment of the transaction and only to the extent that is necessary to remove the prejudice experienced by the creditor.

The annulment of the transaction shall have no effect upon the rights of third persons in good faith to the property which was the object of the annulled transaction.

Article 6.67. Presumption of bad faith

It shall be presumed that the parties to a transaction by whom interests of the creditor are violated were in bad faith if:

1) the debtor has concluded a transaction with his spouse, children, parents or other close relatives;

2) the debtor has made a transaction with a legal person in which his spouse, children, one of the parents, or any other close relative is the director, a member or a participant of its managing body who either directly or indirectly hold by the right of ownership at least fifty percent of the issued shares (portion of shares owned by a shareholder, contributions, etc.);

3) the debtor, who is a legal person, has concluded a transaction with a natural person who is the director or a member of the managing body of that legal person, or with his spouse, children, one of the parents or any other close relative;

4) the value of the prestation which had to be performed by the debtor considerably exceeds the prestation presented by the other party to the transaction (disproportion of counter-obligations);

5) a transaction has been made upon the payment of a debt that has not yet matured;

6) the debtor, who is a legal person, has made a transaction with a natural person who either himself, or his spouse, children, parents, or any other close relative, or jointly with them are the participants of that legal person and hold directly or indirectly by the right of ownership at least 50 percent of the shares (portion of shares owned by a shareholder, contributions, etc.) of that legal person;

7) the debtor, who is a legal person, has concluded a transaction with another legal person which is controlled by the debtor, or if the director or a member of the managing body of one of the parties to the transaction is a person who directly or indirectly, separately or jointly with his spouse, children, parents or close relatives hold by the right of ownership at least 50 percent of the issued shares (portion of shares owned by a shareholder, contributions, etc.) of the other legal person or of the issued shares (portion of shares owned by a shareholder, contributions, etc.) in both legal persons;

8) the debtor, who is a legal person, has made a transaction with an association of legal persons or with any other corporation where the debtor is a member.

Article 6.68. An oblique action

A creditor whose right to claim against the debtor is certain and exigible shall be entitled to exercise the rights of the debtor by bringing an action in the debtor’s name in the event where the debtor fails to implement these rights himself, or refuses to exercise them to the prejudice of the creditor’s interests (an oblique action).

An oblique action may be brought only in the instances when the creditor is necessitated to protect his rights (in the event of the debtor’s insolvency, bankruptcy proceedings instituted against him, or in any other special events) and under the condition that the time-limit for the performance of obligations matured prior to the institution of the action.

The creditor shall have no right to demand exercising of such debtor’s rights which are related exceptionally with the person of the debtor.

A person against whom an oblique action of the creditor is brought may set up against the creditor all the objections and defences he could have set up against the debtor.

Upon the satisfaction of an oblique action, the recovered property shall be set-off into the property of the debtor and shall benefit all his creditors.

Article 6.69. Right of retention

The creditor shall be able to avail himself of the right of retention of a thing until the obligation is performed by the debtor.

The procedure for the implementation of the right of retention is established by the provisions of Book Four of this Code.

CHAPTER V

SECURITY OF PERFORMANCE OF OBLIGATIONS

Article 6.70.Kinds of security of obligations

Performance of obligations may be secured in accordance with a contract or laws in the form of penalty, pledge (hypothec), suretyship, guarantee or earnest money, or any other forms resulting from the contract. Relationships related to pledge (hypothec) are regulated by the norms of Book Four of this Code.

The security of performance may be applied both to already existing obligations and to those that will arise in the future.

SECTION ONE

PENALTY

Article 6.71. Concept of penalty

A penalty is a sum of money determined by laws or a contract which the debtor shall be bound to pay to the creditor in the case of failure to perform an obligation, or defective performance thereof (fine, forfeit).

The penalty may be established in the form of a concrete sum of money or expressed in percentage terms on the amount of the secured obligation.

The penalty stipulated for a delay in performance of an obligation may be established for every day, week, month, etc. that exceeds the time-limit of the performance.

Article 6.72. Form of agreement upon penalty

The clause by which it is agreed upon a penalty must be made in writing.

Article 6.73. Penalty and real performance of the principle obligation

1.Where an obligation with a penal clause is established, the creditor may not demand both the real performance of the principal obligation and the penalty, except in cases when the debtor is in delay of the performance of the obligation. Any stipulation of parties contrary to the provisions of this Article shall be void. The sum stipulated in the penal clause shall be set-off into damages in the case where compensation of damages is claimed.

The amount of penalty stipulated may be reduced by the court when it is manifestly excessive, or if the creditor has already benefited from partial performance of the obligation, though the sum may not be reduced below the damages payable for the failure to perform the obligation or for defective performance thereof. No reduction of the penalty paid shall be allowed.

The provisions of this Article shall not apply in the instances where it is otherwise provided for by this Code in respect of certain types of contracts.

Article 6.74. Voidability of agreement upon penalty

Where the transaction from which the obligation has arisen is declared void within the procedure established by laws, any agreement upon the security of performance of such an obligation by way of penalty shall be equally void.

Article 6.75. Burden of proof

The burden to prove the fact of performance of the principal obligation in a proper way shall be placed on the debtor by whom the obligation to pay the penalty is disputed on the basis of assertion that the obligation has already been performed by him.

SECTION TWO

SURETYSHIP

Article 6.76. Concept of a contract of suretyship

1.Suretyship is a contract by which the surety binds himself to be liable towards the creditor of another person gratuitously or for a remuneration in the event where the person in whose favour suretyship is granted fails to perform the obligation in whole or in part.

Suretyship is an accessory obligation (dependent upon the obligation of the principal debtor for which it has been entered into). Suretyship shall terminate upon the extinguishment of the principal obligation or it having been declared void.

Article 6.77. Grounds for suretyship

1.Suretyship may result from a contract of suretyship or may be imposed by laws, or ordered by a judgement.

Suretyship may be granted for an obligation irrespective of the request of the person for whose obligation it is being granted, also irrespective of the identity of the person who binds himself.

A person may become surety either for the principal debtor or for his surety.

The creditor shall have the right to require a concrete person to be a surety. In the case where the creditor does not express such a requirement, the debtor shall offer a person with sufficient property to perform the obligation to act as surety.

Where a debtor is bound to furnish suretyship on the grounds of laws (legal surety) or a court judgement (judicial surety), he may present other adequate security of the obligation instead suretyship.

Disputes whether the property of the surety is sufficient, and whether the security offered is adequate shall be decided by the court.

Article 6.78. Obligations secured by suretyship

Suretyship may be contracted for both already existing obligation and those which will arise in future, but in any event, suretyship may be applied only for the performance of a sufficiently specified obligation.

Suretyship may also be contracted for a part of the principal obligation. Suretyship may not be contracted for an amount in excess of that owed by the debtor. Suretyship may not be contracted under any other onerous conditions. Where the sum secured by suretyship extends beyond the limits of the debt for which it was contracted, it must be diminished till the amount of the debt.

Suretyship shall extend to all the accessories of the principal obligation.

Article 6.79. Form of a contract of suretyship

Suretyship must be contracted in written form. Non-observance of this requirement shall result in the voidability of the contract.

Article 6.80. Relationships between a surety and a creditor

At the demand of the surety, the creditor shall be bound to provide him with information in respect of the content and the conditions of the principal obligation, also with information regarding its performance.

The surety shall have the right to demand from the creditor exaction to be levied first on concrete property of the principle debtor, except in the cases where the surety has expressly renounced this right. Where the creditor failed to comply with the instruction of the surety, and did not levy the exaction first to the indicated concrete property of the principle debtor, the creditor shall be liable for any subsequent insolvency of the principle debtor up to the value of the property indicated. These rules shall not apply in the instances of solidary liability of the principal debtor and the surety towards the creditor (Paragraph 1 of Article 6.81 of this Code).

Article 6.81. Liability of a surety

If the debtor fails to perform the obligation, both the debtor and the surety shall be liable as solidary debtors towards the creditor for the fulfilment of this obligation unless otherwise provided for by the contract of suretyship.

The surety shall be liable to the same extent as the debtor (for the payment of interest and penalty, compensation for damages) unless otherwise established by the contract of suretyship.

Where several persons become sureties of the same debtor for the same debt, they shall be solidary liable unless otherwise provided for by the contract of suretyship.

Article 6.82.Rights and duties of a surety arising as the result of an action brought against him

In the event where the creditor brings an action against the surety, the latter shall be bound to implead the debtor. Otherwise, the debtor shall have the right in the case of a counter-claim brought by the surety to set up against the creditor all the defences he is entitled to.

The surety shall have the right to set up against the creditor all the defences which could be set up by the principal debtor. The surety shall not lose his right to set up such defences even when the debtor refuses his defences or admits his obligation.

The surety may avail himself of all other rights which may be exercised by the debtor (dispute a debt, apply a set-off, suspend performance of the obligation, etc.), with the exception of those which are exceptionally related to the person of the debtor.

A postponement of the performance of obligation granted to the debtor by the creditor shall also apply to the surety.

Article 6.83. Rights of a surety after the obligation is performed

All the rights of the creditor arising from a certain obligation shall pass to the surety by whom that obligation has been performed.

The surety who has bound himself at the request of the debtor or with his consent, and who has performed the obligation shall have additional right to claim from the principal debtor compensation for all the damages incurred in relation with the suretyship; he may also charge interest on the sum paid to the creditor even if the principal debt is not producing interest. A surety who has bound himself without the consent of the debtor may only claim from him what the debtor would have been bound to pay, including damages, if there had been no suretyship.

Every of several co-sureties shall have the right by way of recourse to claim from the debtor what he has paid.

After the surety has performed the obligation, the creditor shall be bound to deliver him the documents confirming the right of claim against the debtor, as well as the rights by which such claim is secured.

In the event where the surety fails to inform the principal debtor that he has performed the obligation, he shall have no right of recourse against the principal debtor who, being unaware of this performance, effectuates it repeatedly. The same effects will be produced in the case if the surety performs the obligation without informing the principal debtor at the time when the principal debtor has already acquired the right to set up against the claim of the creditor defences that could have enabled him to have the debt declared extinguished. Nevertheless, in both these cases the surety shall retain his right of claim for recovery of the sums that were not due to the creditor.

Article 6.84. Right of recourse of a surety performing a solidary obligation

If several persons acted as sureties for the same obligation, and the obligation was performed by one of the co-sureties, a co-surety who has performed shall have the right of recourse against other co-sureties for their respective portions in the event where those sums cannot be recovered from the debtor.

Article 6.85. Duty of a debtor to inform the surety about the performance of the obligation secured

The debtor who has performed the obligation secured by suretyship shall be bound to immediately inform the surety about the performance. Otherwise the surety who in his turn has performed the obligation himself shall retain the right of recourse against the debtor. In this case, the debtor may recover from the creditor only what has been received by him not due.

Article 6.86. Relief of a surety from liability

Where the creditor refuses his priority right in the satisfaction of his claim, or declines any other security of the obligation established in his favour, the surety shall be released from liability if the creditor would have been able to satisfy his claim by exercising the refused rights.

Article 6.87. Termination of suretyship

A suretyship shall be terminated at the time of extinguishment of the obligation which was secured by it.

A suretyship shall also be terminated by the death of the surety.

If the qualities of a surety and debtor are united in the same person, the suretyship shall remain in force if the creditor has an interest in its continuation.

Unless the contract of suretyship provides for otherwise, suretyship shall be terminated if the obligation is changed in essence, and such change without the consent of the surety results in the increase of his liability, or in any other consequences unfavourable thereto.

Suretyship shall be terminated if the debt according to the secured obligation is assumed by another person and the surety does not give his consent to the creditor to extend suretyship over in respect of the new debtor.

Suretyship shall be terminated where the creditor without any grounds refuses to accept a proper performance of the obligation offered by the debtor or the surety.

Article 6.88. Termination of suretyship contracted for a determinate period

Suretyship contracted for a determinate period or with a view of performing an obligation with a fixed term shall be terminated if the creditor does not bring an action against the surety within three months from the day on which the contract of suretyship or the time-limit of performance of the obligation expires.

Where suretyship by which the future obligation is secured is contracted for a fixed period, it shall terminate on the day of maturity of the time-limit of suretyship if the obligation did not arise before the expiration of this time-limit.

Article 6.89. Termination of a suretyship contracted for an indeterminate period

In absence of any agreement to the contrary, where the suretyship is contracted for an indeterminate period, or where the time-limit of performance of the obligation is not indicated, nor determined by the moment of demand for performance, the suretyship shall be terminated upon the expiry of two years from the day on which the contract of suretyship was formed if the creditor does not bring an action against the surety within this time-limit.

Where a future obligation is secured by the suretyship contracted for an indeterminate period, the surety may by his unilateral notice dissolve it upon expiry of three years from its contraction if during the three years the obligation did not become exigible. The surety must immediately inform in writing the debtor and the creditor of the dissolution of suretyship.

SECTION THREE

GUARANTEE

Article 6.90. Concept of a guarantee

A guarantee is an unilateral obligation of a guarantor by which he binds himself within the sum indicated in the guarantee to be liable fully or in part towards another person (creditor) if a person (debtor) fails to perform the obligation, or performs it improperly; the guarantor also binds himself to compensate the creditor for damages under certain conditions (when the debtor becomes insolvent, and in other cases). The guarantor shall be subsidiary liable.

The obligation of the guarantor towards the creditor does not depend on the principal obligation, the performance of which is secured by it; a guarantee is an independent obligation even in the cases when the principal obligation is indicated in the guarantee.

A guarantor who has performed the obligation for a debtor obtains the right of recourse against the latter.

Article 6.91. Form of a guarantee

A guarantee must be formed in writing. Failure to meet this requirement shall render the guarantee null and void.

Article 6.92. Limits of the obligation of a guarantor

The obligation of a guarantor shall be subsidiary and limited to the amount for which the guarantee was issued.

In the event where the guarantor fails to perform his obligation under the contract of guarantee, or performs it improperly, his liability towards the creditor for damages suffered as a consequence of violation of the guarantee shall not be limited to the amount for which the guarantee was issued.

Upon receiving the demand of the creditor to perform the obligation, the guarantor must immediately inform the debtor and submit to him copies of the creditor’s demand with the documents appended.

The guarantor has the right to refuse satisfaction of the creditor’s demand if this demand or the documents appended thereto do not correspond to the conditions of the guarantee, or they were submitted after the expiry of the time-limit established for the guarantee. The guarantor must immediately notify the creditor about the refusal to satisfy his demand.

Where it becomes known to the guarantor that the principal obligation secured by the guarantee has been performed fully, or has been terminated on other grounds, or has been acknowledged null and void, he must immediately notify of this the creditor and the debtor. In the event where after such notification the guarantor receives a repeated demand of the creditor to perform the obligation, he shall be obliged to satisfy thereof only upon the presentation by the creditor proof that the obligation has not been terminated and continues to be valid.

Article 6.93. Bank guarantee

Under a contract of a bank guarantee, the bank or any other credit institution (guarantor) binds itself in writing to pay to the debtor’s creditor upon his demand a sum of money fixed in the guarantee.

For the granting of a bank guarantee, the debtor shall pay remuneration to the guarantor stipulated in the contract concluded between the debtor and the bank.

The bank guarantee enters into force from the moment of its granting unless otherwise provided for by the contract.

The demand of the creditor concerning the performance under a bank guarantee must be submitted to the guarantor in the written form with all the necessary documents appended. It must be indicated in the demand in what manner the debtor has violated the principal obligation secured by the guarantee.

Article 6.94. Irrevocability of a bank guarantee

A bank cannot revoke any guarantee granted by it unless otherwise provided for by the contract of a guarantee.

Article 6.95. Prohibition to assign the right of claim

The creditor cannot assign his right of claim secured by the bank guarantee if this guarantee does not stipulate otherwise.

Article 6.96. Termination of a bank guarantee

Bank guarantee shall be terminated:

1) upon the payment by the bank to the creditor of the amount for which the guarantee was issued;

2) by the expiration of the time-limit of the guarantee established by the contract of guarantee;

3) by the creditor’s renunciation of his rights arising from the guarantee and the return thereof to the bank, or information of the bank about the renunciation in writing.

Upon becoming aware that the guarantee has terminated, the bank shall be bound to notify the debtor without delay.

Article 6.97. Right of recourse of the bank

The bank and the debtor may establish by a contract the right of recourse of the bank against the debtor after the bank effectuates to the creditor the payment of the sum of money stipulated in the guarantee.

The bank shall not have the right within the procedure of recourse to claim from the debtor compensation of the amounts paid not in accordance with the guarantee, or the amounts paid for non-performance or the improper performance of the obligation of the bank to the creditor.

SECTION FOUR

EARNEST MONEY

Article 6.98. Concept of the earnest money

Earnest money shall be deemed to be a monetary amount issued by one contracting party from the payments due to be paid by him under a contract to the other party to prove the conclusion of the contract and secure its performance.

The earnest money cannot be used for securing a preliminary contract, likewise a contract that must be concluded in the obligatory notarial form.

Article 6.99. Form of the agreement for an earnest

The agreement for an earnest must be concluded in written form irrespective of the amount of the earnest money.

The agreement for an earnest which does not meet the requirement of the written form shall be null and void.

Article 6.100. Consequences of non-performance of an obligation secured by the earnest

If the party which issues an earnest is liable for non-performance of the contract, the earnest shall remain with the other party. In the event where the party to whom the earnest was handed over is liable for non-performance of the contract, he shall be bound to pay to the other party the double amount of the earnest money.

In addition, the party who is liable for non-performance of the contract shall be obliged to compensate the other party for damages, including the earnest money unless otherwise provided for by the contract.

CHAPTER VI

ASSIGNMENT OF A CLAIM

Article 6.101. Right of the creditor to assign a claim

A creditor may without the consent of the debtor assign to another person all or a part of the claim provided that the transfer does not contradict to laws or the contract, or the claim is not related with the person of the creditor. The assignment of the claim may not infringe the rights of the debtor and render his obligation more onerous.

By effect of the assignment, the claim is transferred to the assignee with the privileges established for the security of performance of the obligation and other accessory rights.

A future claim shall be likewise subject to assignment.

The right of a claim is transferred to another person on the grounds of laws in the following cases:

1) upon universal assumption of the rights of the creditor;

2) where the rights of the creditor under a court judgement are delegated to another person if such possibility is provided for by laws;

3) where the surety or the pledgor of the debtor, who are not parties to the secured obligation, perform the obligation for the debtor;

4) where within the procedure of recourse the rights of the creditor connected with the debtor responsible for the insurance event are transferred to an insurance company;

5) in other cases provided for by laws.

In the event where the person of the creditor is of the essential importance to the debtor, the creditor shall be prohibited to assign the claim without the consent of the debtor.

Article 6.102. Forbidden assignments

The assignment of a claim against which recourse cannot be taken shall be prohibited.

Judges, public prosecutors and advocates cannot become assignees of claims in respect of which litigation has arisen in the court within whose jurisdiction they exercise their functions.

It shall be prohibited to assign a claim inseparably related with the person of the creditor (claim for maintenance, claim for compensation of damage caused by impairment of health or loss of life).

Article 6.103. Form of a contract

Formation of a contract upon assignment of a claim shall be subject to the same formalities as prescribed for the principal obligation.

Article 6.104. Delivering of documents

The creditor who has assigned his claim to another person shall be bound to hand over to the new creditor the documentary evidence pertaining to the claim and the accessory rights, including the right to receive interest. If such documents remain of importance to the previous creditor, the new creditor shall only be entitled to copies thereof confirmed within the established order.

Assignment of a claim, the performance of which is secured by a pledge (hypothec), must be inscribed in the Register of Hypothec. In this case, the previous and the new creditors shall be obliged to take measures in order to ensure that relevant inscriptions are made in the Register of Hypothec.

In the event of the assignment of the universality of claims, the previous creditor shall be obliged to deliver to the new creditor any pledged property which is under his control.

All expenses related with the official registration and delivering of the documents stipulated in Paragraphs 1 and 2 of this Article shall be covered by the new creditor unless otherwise provided for by the contract.

A claim confirmed by a bearer security issued by the debtor shall be assigned by handing over the bearer security to the new creditor. In this case, the debtor shall be bound to perform the obligation to any person who hands over the security to him. In this event, the debtor shall neither be entitled to setting up any objections or defences other than a claim for acknowledging the nullity of the bearer security.

A creditor who has been dispossessed of a bearer security against his will may prevent the debtor from performing the obligation to the person who presents the security exclusively by means of instituting judicial proceedings.

Article 6.105. Liability of an assignor (previous creditor)

The assignor (previous creditor) shall be liable towards the assignee (new creditor) for the invalidity of the assigned claim, though he shall not be liable for the debtor’s non-performance of the obligation arising from this claim, except in the cases when the assignor gives a surety to the assignee for the debtor.

When the right to claim is assigned gratuitously, it shall be deemed that the assignor affirms that the right to claim exists, and is owned by him even if such affirmation is not provided for by the contract (statutory guarantee), with the exception of cases where the assignee acquired the right to claim at his own risk, or at the time of the assignment, he knew or should have known of the uncertain nature of the claim.

Where the claim is assigned onerously, the assignor shall be liable only for the insolvency of the debtor that existed at the time of the assignment, and only to the extent of the amount he received for that assignment.

Article 6.106. Performance of an obligation in favour of the assignor by the debtor uninformed about the assignment of the claim

In the event of failure to inform the debtor that the claim has been assigned, the performance of the obligation in favour of the assignor shall be deemed to be right. If the claim has been assigned several times, the performance of the obligation in favour of any subsequent creditor shall be deemed to be right.

In the case of a dispute over the pretension to the right of claim, the debtor shall have the right to refuse payment to any concrete creditor and perform the obligation by depositing a sum into the depository account of a notary office, bank or any other credit institution.

In the instances where the debtor pays the debt being aware of the dispute indicated in Paragraph 2 of this Article, he shall be performing this at his own risk.

Article 6.107. Defences of the debtor against the claims of the assignee (new creditor)

The debtor shall have the right to set up against the assignee all the defences which he was entitled to set up against the assignor at the time of receiving the notice about the assignment of the claim.

After the assignment of the claim and handing over of a bearer instrument, the debtor who has issued the bearer instrument shall have no right to set up defences against the assignee based upon the assertion that the obligation is simulated or false, or the assignment is prohibited if at the time of the assignment of the claim the assignee did not and could not know of these circumstances.

In the event where after the assignment of the claim the debtor brings an action against the assignor for the annulment of the legal fact from which the obligation arises, the debtor shall be bound to inform of that the assignee, except in the cases when the annulment of that legal fact cannot be invoked against the assignee.

Article 6.108. Set-off against the assignee

The debtor who has the right to a counter-claim against the assignor can avail himself of a set-off against the assignee, except in the cases where at the time of acquisition of the right to the counter-claim the debtor knew of the assignment of the claim, or the time-limit for the recovery of the assigned claim expired after he became aware of its assignment, or after the expiration of the time-limit allotted for the recovery of the assigned claim.

Article 6.109. Notice of the assignment of a claim

The fact of the assignment of the claim may be invoked against third persons and the debtor from the moment when the debtor acquiesced in it, or received a copy of the document confirming the fact of the assignment of the claim, or any other evidence of the fact of the assignment of the claim.

Where the place of the debtor’s whereabouts is unknown, the assignment of the claim may be announced by public notice (Article 1.65 of this Code).

The assignment of the right of claim which is registered in the Public Register within the order established by laws, shall be announced in accordance with the legal procedure and the fact of the assignment shall be registered in the Public Register.

The assignment of a claim cannot be set up by the creditor against the debtor if the creditor gives a notice of this assignment to the debtor, even if the assignment would have not occurred or would have been declared void.

The handing over of the contract on the assignment of the claim to the assignee and presentation of that contract to the debtor shall also be deemed to constitute a notice.

A notice on the assignment of the claim may be renounced only with the consent of the assignee.

The debtor shall be bound to perform the obligation to the assignee only if the latter together with the expression of his demand presents the contract on the assignment of the claim. Refusal from the obligation or a demand of the performance thereof by the assignee shall have no effect without presentation of a contract on the assignment. This rule shall not apply if the assignee has notified the debtor of the assignment of the claim in writing.

Article 6.110. Assignment of other rights

The rules establishing the procedure of the assignment of a claim shall also apply to the assignment of other rights unless otherwise provided for by laws.

VII CHAPTER

TRANSFER OF A CLAIM TO A THIRD PERSON WITHIN THE PROCEDURE OF RECOURSE (SUBROGATION)

Article 6.111. Grounds for subrogation

Subrogation may be effectuated upon the grounds of a written contract or laws.

Article 6.112. Cases of subrogation

A claim shall be transferred to a third person by way of subrogation if:

1) the claim is satisfied from the property of the third person;

2) the obligation is performed for the debtor by the third person whose property was pledged in securing the performance of obligation;

3) the third person performs the obligation for the debtor in order to prevent seizure of property, even though the property does not belong to him, where the seizure would make him lose whatever rights he has in that property;

4) the debtor and the third person who has paid the debt concludes a contract upon the payment of the debt, provided that the creditor knew of this contract at the time of payment, or had been notified thereof.

Article 6.113. Rights acquired in the result of subrogation

A third person who is subrogated to the rights of the creditor, shall not obtain more rights than the subrogating creditor.

Article 6.114. Subrogation by operation of law

A claim shall be transferred to a third person according to subrogation by operation of law in the following cases:

1) in favour of the creditor who pays the debt to another creditor whose claim has preference to his by virtue of its securement in the form of a pledge (hypothec) or by the priority of claim;

2) in favour of the acquirer of the property when he performs an obligation towards the creditor whose claim is secured by a pledge (hypothec) on that property;

3) in favour of a person who performs the obligation to which he is bound with other debtors, or has reasonable interest in the performance thereof;

4) in favour of a heir who at his expense performs the obligation of succession for which he was not bound;

5) in other cases provided for by laws.

VIII CHAPTER

DELEGATION OF DEBT

Article 6.115. Delegation of debt by a contract between the creditor and the new debtor (delegee)

A third person shall be able by the effect of a contract with the creditor to accept the rights and duties of the debtor.

Article 6.116. Delegation and assumption of debt by the effect of a contract between the debtor and the person who assumes the debt (delegee)

Delegation of debt may be effectuated by the debtor exclusively with the consent of the creditor. The consent shall be given only after the creditor is notified of the intended delegation by the debtor and the person who assumes the debt (delegee). Until the creditor has consented, the contract may be modified or terminated by the parties. After the consent of the creditor is received, the contract between the initial and the new (delegee) debtor may not be modified.

The creditor’s consent for delegation of the debt may be given in advance. The creditor shall have no right to revoke his consent given in advance unless he has reserved this right in the said consent.

If the creditor has not given his consent, delegation of the debt shall be deemed not to have been effectuated. In the event where the debtor and the person who assumes the debt (delegee) establish a time-limit during which the consent of the creditor must be given, the consent may be given within the period provided. If no consent of the creditor is given within the established time-limit, it shall be deemed that the creditor has not consented to the delegation of the debt.

Pending the expression of consent or dissent by the creditor, the person who assumes the debt (delegee) shall be bound to the debtor for the performance of the obligation in favour of the creditor.

Upon effectuation by the debtor delegation of a debt secured by pledge (hypothecated debt), the right of pledge to the property of the debtor shall remain valid.

Article 6.118. Form of the contractual delegation and assumption of debt

Contractual delegation and assumption of a debt must be made in writing.

Article 6.119. Defences available to the person who assumes a debt (delegee)

1.The new debtor (delegee) shall have the right to invoke against the creditor all the defences based upon the obligatory relationship between the creditor and the initial debtor. Nevertheless, the claim of the initial debtor cannot be claimed by the new debtor (delegee) for a set-off.

The new debtor (delegee) cannot invoke against the creditor the defences based upon the relationship between the initial debtor and the person who has assumed the debt (delegee) which formed the basis for the delegation of the debt.

Article 6.120. Accessory rights

Upon the change of the debtor in the effect of the assumption of a debt, all accessory rights of the creditor shall remain unchanged provided that they are not purely personal in respect of the initial debtor.

Suretyship and pledge granted by a third person shall be extinguished by the delegation of the debt if the surety or the pledgor do not expressly state their consent to be liable for the new debtor (delegee).

Article 6.121. Effects of invalidity of a contract of delegation of debt

If a contract of delegation of debt is declared null and void, the obligations of the initial creditor, likewise all his accessory rights and responsibilities arising therefrom shall be restored; though the rights of third persons in good faith shall be retained.

The creditor shall have the right to claim against the person who has assumed the debt (delegee) compensation of damages resulting from the invalidity of contract of delegation of debt, except in the instances where the invalidity of that contract and the resulting damages were not conditioned by the delegee’s fault.

Article 6.122. Assumption of property or a legal person

A person who has assumed property or an enterprise with its assets and liabilities shall also assume the rights and obligations connected with the property assumed.

Assumption of obligations in the cases of reorganisation of a legal person shall be regulated by the provisions of Book 2 of this Code.

CHAPTER IX

EXTINCTION OF OBLIGATIONS

SECTION ONE

GENERAL PROVISIONS OF EXTINCTION OF OBLIGATIONS

Article 6.123. Extinction of an obligation by performance

An obligation shall be extinguished by its proper performance. It shall likewise be extinguished where a creditor has accepted the performance of a different kind in substitution for the one originally called for.

After the acceptance of performance by the creditor, the burden of proof of non-performance or the improper performance thereof shall fall on the creditor.

Extinction of an obligation by a proper performance entails termination of all accessory rights and liabilities arising from this obligation.

Article 6.124. Extinction of an obligation by the expiry of a resolutory time-limit

An obligation shall be extinguished by the expiry of a resolutory time-limit which is a condition for the termination of the obligation.

Article 6.125. Extinction of an obligation by the agreement of parties

An obligation may be extinguished partly or in whole by the agreement of the parties thereof. Such agreement may be concluded in any form, except in cases where its obligatory written or notary form is established for the arising of the obligation.

An obligation may be extinguished by a unilateral statement of the party to the obligation only in cases provided for in laws or a contract.

Article 6.126. Extinction of an obligation by confusion

An obligation shall be extinguished where the qualities of creditor and debtor are united in the same person.

Where confusion ceases to exist, the obligation shall be restored unless it has been extinguished upon other grounds.

The confusion of the qualities of the parties to the obligation shall not affect the rights of third persons.

An obligation cannot extinguish by confusion if the claim and the debt are related with separate and unconnected property.

In the event of suretyship, confusion of the qualities of creditor and debtor shall result in the extinction of the suretyship.

Confusion of the qualities of surety and creditor, or of surety and principal debtor shall not be the grounds for the extinction of the principal obligation.

Confusion of the qualities of creditor and one of the solidary debtors, or of debtor and one of the solidary creditors shall be the grounds for the extinction of the obligation only to the extent of the share of that solidary debtor or solidary creditor.

A pledge (hypothec) shall be extinguished by confusion of qualities of hypothecary creditor and the owner of the pledged property. Nevertheless, if a creditor is evicted for a cause which is not imputable to him, the pledge (hypothec) shall revive.

Article 6.127. Extinction of an obligation by impossibility of its performance

An obligation shall be extinguished when its performance becomes impossible as a consequence of superior force which is not imputable to the debtor. An obligation shall extinguish upon these grounds only in that event if the superior force arose before the obligation was violated by the debtor. The burden of proof of a superior force shall fall on the debtor. In the event where the performance was rendered impossible only in part, the debtor shall be discharged from the obligation upon performing that part whose performance is still possible.

In the event indicated in Paragraph 1 of this Article, the debtor in a bilateral contract who has been released by impossibility of performance shall be bound to return all the benefits which he has received from the other party, and he shall have no right to claim performance of the remaining part of the unperformed obligation of the creditor in accordance with the contract.

If the performance of the obligation has become impossible by reason of unlawful acts of institutions of the state authority or a local self-government, the parties may claim for compensation of damages from the state or the municipality budget. When such act is annulled, the obligation shall revive unless otherwise conditioned by the contract of the parties or the essence of the obligation, or the creditor has already lost interest therein.

Article 6.128. Extinction of an obligation upon the death of a natural person or liquidation of a legal person

An obligation shall be extinguished upon the death of a debtor if it cannot be performed without the participation of the debtor himself, or if it is in any other way inseparably connected with the person of the debtor.

An obligation shall be extinguished upon the death of a creditor where the performance of the obligation was assigned to the creditor personally, or where it is in any other way inseparably connected with the person of the creditor.

An obligation shall be extinguished upon the liquidation of a legal person (a creditor or a debtor) except where it is stipulated by laws that the obligation must be performed by other persons.

Article 6.129. Release of a debtor from the performance of an obligation

An obligation shall be extinguished by release where the creditor releases his debtor from performance of his obligation, or declares not-existence of the obligation if such release does not violate the rights of third persons towards the property of the creditor.

Release must be expressed in a clear and in unequivocal manner. Release may be onerous or gratuitous.

Release shall be complete unless clearly stipulated by the creditor to be partial.

A creditor shall be presumed to grant a debtor release of the debt where the creditor voluntarily surrenders the document evidencing the debt to the debtor unless the circumstances indicate that the document evidencing the debt has been surrendered to the debtor after he has performed the obligation.

The creditor’s offer addressed to the debtor regarding the latter’s onerous release from performance of an obligation shall be considered accepted if it is not rejected by the debtor immediately upon receipt.

In the event where an obligation is solidary, release granted to one of the solidary debtors shall release the other co-debtors only from the performance of the discharged person’s part. Express release granted by one of the solidary creditors to a debtor shall release the debtor only from the performance of that part in which the claim of that creditor can be brought.

Express renunciation of a pledge (hypothec) or any other kind of security of performance of obligation made by a creditor shall not constitute any grounds for acknowledging that the debtor has been released from performance of the principal obligation.

SECTION TWO

SET-OFF

Article 6.130. Extinction of an obligation by a set-off

An obligation shall be extinguished by a set-off of a counter-claim which is of the same kind and its time-limit has expired, or the time-limit of its performance is not fixed, or it is defined by the moment of a demand to perform the obligation.

A set-off or a refusal to make a set-off shall have no effect in respect of the rights acquired by a third person in good faith.

Article 6.131. Procedure of a set-off

Declaration of intention made by one party shall be sufficient for the effectuation of a set-off.

A set-off shall be effectuated by notifying about thereof the other party to the obligation. The notification shall be deemed of no effect where the set-off is made dependable upon a certain condition, or a time-limit established thereto.

Where the creditor possess documentary evidence of the debt issued by the debtor, the set-off shall be effected by inscribing the declaration of a set-off in the document and by remitting it to the debtor.

If a set-off does not cover the entire claim, or where the creditor still needs the documentary evidence of the debt to exercise his other rights, the creditor may retain the document with the inscription upon the set-off, though the creditor must also furnish the debtor with a written notice of the set-off.

Article 6.132. A time-limit of grace in a set-off

A period of grace granted to the debtor for payment of one of the debts shall not prevent the application of a set-off.

Article 6.133. A set-off when debts are not payable at the same place

The fact that the obligation must be performed in a different place shall not prevent the application of a set-off.

In the event indicated in Paragraph 1 of this Article, the party to the obligation who avails himself of the right of a set-off shall be obliged to compensate for the damages suffered by the other party as a consequence of the obligation not being performed at the place agreed.

Article 6.134. Prohibition to effect a set-off

The following cannot be set-off:

1) claims disputed within the judicial proceedings;

2) claims arising from a contract for the constitution of a life annuity;

3) claims the performance of which is connected with the person of a concrete creditor;

4) claims for damage suffered by reason of bodily injury or death;

5) claims against the state; though, the state may effect a set-off;

6) where the subject-matter of an obligation is property which is exempt from seizure;

7) other claims, in the cases established by laws.

A debtor shall not be entitled with the right of a set-off if he is bound to compensate for damages resulting from his actions performed with the intention to harm.

Article 6.135. Set-off in suretyship relations

A surety may refuse to satisfy the claim of the creditor if the principal debtor is entitled with the right of a set-off.

A surety shall have the right to effect a set-off for what the creditor owes to the principal debtor, i.e. by considering the relationships between the creditor and the debtor, but the principal debtor may not effect a set-off in the interrelations of the creditor and the surety, i.e. for what the creditor owes to the surety.

Article 6.136. A set-off in the case of assignment of claim

Where a claim is assigned, the debtor shall have the right to use for a set-off his claim against the previous creditor for the satisfaction of a claim of the new creditor (assignee) if the time-limit of the debtor’s claim expired before the day when the notice about the assignment of the claim was received by him, or if the time-limit is not established, or if it is defined by the moment of a demand to perform the obligation, with the exception of cases provided for in Article 6.108 of this Code.

Article 6.137. A set-off in the case of a solidary obligation

A solidary debtor may not use a set-off for what the creditor owes to his co-debtor, except for the share of that co-debtor in the solidary debt.

A debtor (whether solidary or not) may not use a set-off against one of the solidary creditors for what another co-creditor owes him, except for the share of that co-creditor in the solidary debt.

Article 6.138. A set-off in the case of several debts

Where several debts are owed by one debtor to the same creditor, a set-off shall be effected by applying the rules of priority of imputation of payment established in Articles from 6.54 to 6.55 of this Code.

Article 6.139. A set-off in a contract concluded in favour of a third person

A person who has assumed an obligation in favour of a third person shall have no right to use his own claim against the other party to the obligation for a set-off to relieve himself.

Article 6.140. A set-off in the case of the debtor’s insolvency

After a debtor has proved to be insolvent, the claims of the creditors may be used for a set-off even though they are not due unless otherwise provided for by laws.

SECTION THREE

NOVATION

Article 6.141. Concept of novation

An obligation shall be extinguished when the parties by their agreement substitute the existing obligation with a new obligation of different subject matter or different kind of performance (novation). Novation shall also be effected where a new debtor is substituted for the initial debtor who is discharged by the creditor. In such a case, novation may be effected without the consent of the initial debtor. Such conduct where by the effect of a new contract, a new creditor is substituted for the previous creditor towards whom the debtor is discharged shall likewise be considered novation.

Novation shall not be presumed, and the intention to effect it must be expressed clearly and unequivocally in all cases.

Novation shall be possible only if the original obligation is valid.

It shall be prohibited to apply novation for the obligations to compensate for damage incurred by reason of bodily injury or death, also for the obligations the performance of which is connected exceptionally with the person of the parties.

Article 6.142. Conduct that does not imply novation

Any extension or abridgement of the time-limit of performance of an obligation, the issuance or change of a document confirming the existence of the obligation, and any other accessory modifications of an obligation shall not be considered novation.

Article 6.143. Influence of novation upon accessory rights

Right of pledge (hypothec), also other accessory rights arising from the original obligation shall be extinguished by novation, except in the cases where the parties agree to preserve them.

If novation is made between the creditor and one of the solidary debtors with the effect of discharging from the performance of the obligation all other co-debtors, the right of pledge (hypothec) and other accessory rights arising from the original obligation may be retained only in respect of the property of the debtor who makes the new obligation (novation) with the creditor.

Where novation is effected by substituting a new debtor for the initial debtor who is discharged from the performance of the obligation, pledge (hypothec) by which the performance of the obligation is secured, may not be transferred to the property of the new debtor. Pledge (hypothec) attached to the property of the discharged initial debtor may be retained only with the consent of the initial debtor. In the event where a new debtor acquires from the initial debtor a thing, the rights to which are encumbranced by pledge (hypothec), the pledge (hypothec) shall be retained if the new debtor consents thereto.

Article 6.144. Other effects of novation

Where novation is effected by substituting a new debtor for the initial, the new debtor may not invoke against the creditor the defences which he could have raised against the initial debtor, nor the defences which the initial debtor had against the creditor. Though, the debtor may claim for the nullity of the transaction from which his obligation results.

In the event of novation of a creditor and a principal debtor, a surety of the debtor shall be released from the performance of the obligation.

An obligation shall not be extinguished upon the grounds provided for in Paragraph 2 of this Article if the creditor requires participation of the surety in the novation and the surety refuses.

CHAPTER X

RESTITUTION

Article 6.145. Grounds for restitution

Restitution shall take place where a person is bound to return to another person the property he has received either unlawfully or by error, or as a result of the transaction according to which the property has been received by him being annulled ab initio, or as a result of the obligation becoming impossible to perform because of a superior force.

In exceptional cases, the court may modify the mode of restitution or refuse restitution altogether where it would render undue and unfair aggravation for one party and, accordingly, undue advantage to the other party.

Article 6.146. Mode of restitution

Restitution shall be made in kind, except in the instances where this is impossible or it would cause serious inconveniences for the parties. In these cases, restitution shall be effectuated by payment in monetary equivalence.

Article 6.147. Estimation of monetary equivalence

Monetary equivalence shall be estimated according to prices that were valid at the time when the debtor received what he is liable to restore.

In the case of destruction or alienation of property subject to restitution, the person shall be bound to compensate for the value of the property which was at the time when the property was received, destroyed or alienated, or at the time of its restitution, taking in regard whichever value is the lowest. In the event of the person liable to make restitution being in bad faith, or where the restitution is due to his fault, he shall be bound to return the highest value of the property.

Article 6.148. Indemnity for the lost property

If the property is destroyed by a superior force, the restitution shall not be applied, though the debtor shall be bound to assign to the creditor the claim for indemnity for the lost property, or to deliver him the indemnity he has received for the destroyed property.

In the event where the debtor is in bad faith, or the restitution is due to his fault, he shall be bound to return the value of the property calculated in accordance with the rules provided in Paragraph 2 of Article 6.147 of this Code, except in the cases where the debtor proves that the property would have been destroyed even if it had been in the possession of the creditor.

Article 6.149. Partial destruction of the property

Where the property has suffered partial loss or any other depreciation in value, the debtor shall be bound to pay the creditor monetary equivalence of such partial loss or to indemnify the depreciation in value of the property unless it results from normal wear and tear of the property.

Article 6.150. Reimbursement for expenses incurred for the care of the property

Expenses for the care and custody of the property subject to restitution incurred by the person who is bound to return the property shall be indemnified in accordance with the provisions of Book Four of this Code applicable in respect of possessors in good faith and possessors in bad faith.

Article 6.151. Restoration of fruits and revenues

The fruits and revenues of the property subject to restitution shall belong to the person bound to make restitution. This person shall bear all the expenses incurred in the production of those fruits and revenues.

In the event where the person bound to make restitution is in bad faith, or if the restitution is due to his fault, he shall be obliged to return the fruits and revenues also to indemnify the creditor for any benefit he has derived from the property. Nevertheless, the creditor must compensate to such person for the necessary expenses incurred by him in producing the fruits and revenues.

Article 6.152. Costs of restitution

Costs of restitution shall be borne by both parties in equal shares unless they have agreed otherwise.

In the event where one party is in bad faith, or the restitution is due to his fault, all costs of restitution shall be borne by that party alone.

Article 6.153. Effect of restitution on third persons

Third persons in good faith who in accordance with a transaction of alienation by onerous title acquire property subject to restitution shall be able to invoke this transaction against a person who claims for restitution.

Third persons in good faith who in accordance with a transaction of alienation by gratuitous title acquire property subject to restitution shall not be able to invoke this transaction against a person who claims for restitution if the time-limit of prescription is not exceeded by the latter.

Any other actions performed in favour of a third person in good faith may be invoked against a person who claims for restitution.

PART II

CONTRACT LAW

CHAPTER XI

GENERAL PROVISIONS

Article 6.154. Concept of a contract

A contract is an agreement of two or more persons to establish, modify or extinguish legal relationships by which one or several persons obligate themselves to one or several other persons to perform certain actions (or to refrain from performing certain actions) while the latter persons obtain the right of claim.

Contracts shall be subject to the norms of this Code that regulate bilateral and multilateral transactions.

Unless any exceptions from general rules are established by norms regulating contractual relationships, the provisions of Part I of this Book that regulate general questions of law of obligations shall likewise apply to contracts.

Article 6.155. Limits of application

General rules of contract law provided for in this Chapter shall apply to all contracts taking regard of their nature.

Special rules for certain contracts may also be established by other laws of the Republic of Lithuania.

Article 6.156. Principle of freedom of contract

1.The parties shall be free to enter into contracts and determine their mutual rights and duties at their own discretion; the parties may also conclude other contracts that are not established by this Code if this does not contradict laws.

It shall be prohibited to compel another person to conclude a contract, except in cases when the duty to enter into a contract is established by laws or a free-will engagement.

The parties may form a contract which contains elements of contracts of several classes. Such contract shall be governed by norms regulating the separate classes of contracts unless otherwise provided for by the agreement of the parties, or this contradicts the essence of the contract.

The conditions of a contract shall be established by the parties at their own discretion, except in the cases where certain conditions of a contract are determined by the mandatory rules of law.

Where the conditions of a contract are established by a non-mandatory law rule, the parties may agree on non-application of these conditions, or they may agree on any other conditions. If the parties do not enter into such agreement, the conditions of the contract shall be determined in accordance with the non-mandatory norm.

Where some conditions of a contract are regulated neither by laws nor by agreement of the parties, in the case of a dispute such conditions shall be determined by a court on the basis of usages, principles of justice, reasonableness and good faith, also by application of analogy of statutes and the law.

Article 6.157. Mandatory rules of law and a contract

The parties themselves may not agree on modification, restriction or abrogation of an effect or application of the mandatory rules of law, irrespective of by what law – national or international – these norms are determined.

Modification of the norms of law of mandatory character adopted after the conclusion of the contract shall not affect the conditions of the contract.

Article 6.158. Good faith and fair dealing

Each party of a contract shall be obliged to act in accordance with good faith in their contractual relationships.

The parties may not change or exclude by their agreement the duty established in Paragraph 1 of this Article.

Article 6.159. Elements of contract

The following elements shall be sufficient to render a contract valid: an agreement of legally capable parties, and, when prescribed by laws, also a form of a contract.

Article 6.160. Classes of contracts

Contracts may be unilateral and bilateral, onerous and gratuitous, consensual and real, contracts of successive performance and of instantaneous performance, consumer contracts and others.

According to the manner of their conclusion, contracts are divided into contracts by mutual agreement and contracts of adhesion.

According to the definiteness of advantages that the parties obtain, contracts are divided into aleatory (where receiving of advantages and the amount of the obligation of the parties is uncertain and dependant on occurrence or non-occurrence of a certain event) and commutative contracts (where the advantages and the extent of the advantages obtained by the parties are certain and determinate at the time when the contract is formed).

Article 6.161. Public contract

A public contract is a contract concluded by a legal person (businessman) that renders services or sells goods to an indefinite number of persons, i.e. to everyone who makes a request (enterprises of transport, communications, electricity, heating, gas, water supply and others).

In rendering services or selling goods, any legal person (businessman) shall be bound to enter into contracts with every person who applies for those services, with the exception of cases approved in accordance with the procedure established by laws.

When concluding public contracts, a legal person (businessman) may not privilege one or another person, except in cases provided for by the law.

Prices and other conditions of goods and services under public contracts must be equal to all consumers of the same category, except in cases expressly provided for by laws where preferential conditions may be applied to the separate categories of consumers.

In the cases established by laws, a legal person (businessman) shall be obliged to submit standard conditions of a public contract to be approved by a relevant state institution. In the cases established by laws, public contracts may be concluded in accordance with standard conditions approved by the corresponding state institution and obligatory to both parties.

CHAPTER XII

FORMATION OF CONTRACTS

Article 6.162. Formation of a contract

A contract is concluded either by the proposal (offer) and the assent (acceptance) or by any other actions of the parties that are sufficient to show their agreement.

Where the parties agree on all essential conditions of a contract, the contract shall be effective, even though the parties have reserved an agreement as to secondary conditions. If the parties do not reach their agreement on the secondary conditions, the dispute may be resolved within the judicial proceedings taking regard to the nature of the contract, non-mandatory norms, usages, the principles of justice, reasonableness and good faith.

In the course of pre-contractual relationships, parties shall conduct themselves in accordance with good faith.

Parties shall be free to begin negotiations and negotiate, and shall not be liable for failure to reach an agreement.

A party who begins negotiations or negotiates in bad faith shall be liable for the damages caused to the other party. It shall be considered bad faith for a party to enter into negotiations or continue them without intending to reach an agreement with the other party, likewise any other actions that do not conform to the criteria of good faith.

The parties shall be bound to disclose to each other the information they have and which is of essential importance for the conclusion of a contract.

Article 6.164. Duty of confidentiality

Where in the course of negotiations one party furnishes the other with confidential information, the party that has learned or received such information shall be under the duty not to disclose it, or use it unlawfully for his own purposes, irrespective of whether a contract is subsequently concluded or not. The breach of confidentiality inflicts liability of the faulty party in damages suffered by the injured party.

In such cases, the minimal amount of recoverable damages shall consist of monetary expression of benefit received.

Article 6.165. Preliminary contract

A preliminary contract is an agreement of parties by which they obligate themselves to conclude another – principal – contract in future under the conditions negotiated in the agreement.

A preliminary contract must be made in writing. A preliminary contract which fails to meet the required conditions of its form shall be null and void.

In the preliminary contract, the parties shall be obliged to establish a time-limit within which the principal contract must be formed. In the event where such time-limit is not established in the preliminary contract, the principal contract must be formed within one year from the date of the conclusion of the preliminary contract.

If after conclusion of the preliminary contract, a party without due grounds avoids or refuses to enter into a principal contract, he shall be bound to compensate to the other party for damages inflicted.

In the event where the parties fail to form a principal contract within the time-limit determined in the preliminary contract, the obligation to form that contract shall be extinguished.

Article 6.166. Presumption of knowledge

An offer, acceptance, their revocation or any other declaration addressed to a given person shall be presumed to become known to him at the moment when they reach the place of residence or business (head office) of that person unless the latter proves that not due to his fault or that of his employees it was impossible for him to receive the notice thereof.

Article 6.167. Definition of an offer

A proposal for concluding a contract shall be deemed to be an offer if it is sufficiently definite and indicates the intention of the offeror to be restricted in his rights by a contract and to be bound in the case of acceptance.

An offer may be addressed to a definite person or to an indeterminate number of persons (offer to public).

Article 6.168. Effect of an offer

An offer shall become effective when received by the offeree.

An offer, even if it is irrevocable, may be revoked by the offeror if the notice on the revocation reaches the offeree before or at the same time as the offer.

Article 6.169. Revocation of an offer

Until a contract is concluded, an offer may be revoked if the revocation reaches the offeree before he has dispatched the acceptance.

Nevertheless, an offer cannot be revoked if:

1) it is indicated therein, whether by stating a fixed time-limit for acceptance or otherwise, that it is irrevocable;

2) there were reasonable grounds for the offeree to rely on the offer as being irrevocable, and he acted accordingly.

Article 6.170. Termination of an offer

An offer loses its effect when the notice on its rejection reaches the offeror, or no reply to the offer is received within the time-limit established.

Article 6.171. Offer to public

1.An offer to the public is a proposal for concluding a contract where such proposal is addressed to everyone, also the display of goods with the indicated prices on the shelves in a shop or in the shop window, or a promise to pay for the performance of certain actions.

Revocation of an offer to the public, if made in the same form as the offer, shall extinguish the offer even though not all persons who are aware of the offer have received the notice on the revocation.

Price-lists, prospectuses with prices, priced catalogues, tariffs and other information materials shall not be considered offer to the public unless there are exception established by laws.

Article 6.172. Death, bankruptcy, liquidation or incapacity of an offeror or an offeree

The death, bankruptcy, liquidation or incapacity of the offeror or the offeree shall render an offer to conclude a contract invalid if these events occur before acceptance is received by the offeror.

Article 6.173. Acceptance and its forms

A statement made by the offeree or any other conduct thereof indicating assent to the offer shall be considered acceptance. Silence or inactivity per se shall not imply acceptance of an offer.

An acceptance of an offer becomes effective when it reaches the offeror.

If by virtue of the offer, or as a result of practices which the parties have established between themselves, or of existing usages, the possibility to accept an offer without notice to the offeror (by silence or by performing factual actions) is foreseen, the acceptance shall be legally effective from the moment when certain actions expressing the will of the offeree are performed.

Article 6.174. Period of acceptance

An offer must be accepted within the time-limit fixed by the offeror, in the event where no time-limit is fixed, within reasonable time having in regard concrete circumstances, including the capacities of the means of communication used by the parties.

An oral offer must be accepted immediately unless, taking into account concrete circumstances, a different conclusion may be made.

Article 6.175. Acceptance within a fixed time-limit

The time-limit for acceptance indicated by the offeror in his telegram or a letter begins to run from the moment the telegram is handed in for dispach, or from the date written on the letter, or if no date is indicated, from the date shown on the envelope. A time-limit for acceptance indicated by the offeror by means of telecommunication terminal equipment begins to run from the moment when the offer reaches the offeree.

Official holidays or non-working days shall be included in calculating the time-limit established for acceptance. However, if a notice of acceptance cannot be delivered to the offeror because the last day of the time-limit falls on an official holiday or a non-working day, the period shall be extended until the first working day thereafter.

Article 6.176. Late acceptance

A late acceptance shall be effective if the offeror without delay informs about it the offeree or sends him a notice to that effect.

If it is possible to be established from a letter or any other written notice containing a late acceptance that it was sent in time, and if under normal circumstances it would have reached the offeror in due time, the late acceptance shall be deemed to be effective unless the offeror without delay informs the offeree that his offer has been extinguished.

Article 6.177. Revocation of acceptance

An acceptance shall become invalid if the notice on revocation reaches the offeror before or at the same time as the acceptance becomes effective.

Article 6.178. Modified acceptance

A reply to an offer which contains additions, limitations or other modifications of conditions determined in the offer shall be considered a rejection of the offer and constitute a counter-offer.

A reply to an offer which purports to be an acceptance but contains additional or different conditions which do not alter the essence of the conditions of the offer shall constitute an acceptance if the offeror, after receiving the reply, does not immediately object to such discrepancy. If the offeror does not object, the contract shall be deemed to be concluded under the conditions of the offer with the modifications contained in the acceptance.

Article 6.179. Conflict of standard conditions

Where a contract is concluded by an interchange of standard conditions of a contract made between both parties, it shall be considered that the contract is concluded on the basis of standard conditions which are common in substance unless one party clearly indicates in advance his disagreement with the standard conditions proposed by the other party, or informs without delay the other party of his disagreement after the standard conditions are received by him.

Article 6.180. Written confirmation

If the written confirmation which is sent by a party within a reasonable time after the conclusion of the contract, and by which the fact of conclusion of the contract is confirmed contains additional or modified conditions, such conditions shall become part of the contract unless they alter the conditions of the contract essentially, or the recipient of such confirmation objects without delay to the amendments and supplements provided.

Article 6.181. Time and place of contract forming

A contract shall be considered formed at the moment when the acceptance of the offeree to conclude the contract reaches the offeror unless it is otherwise provided for by the contract.

The place of contract forming shall be considered the place where the offeror’s residence or his business is located unless otherwise provided for by laws or the contract.

Where in the course of negotiations one of the parties declares that he will not consider the contract concluded until it is agreed upon specific conditions, or the agreement is correspondingly formalised, no contract shall be concluded before the agreement of parties is reached on those conditions or in that form.

Where a particular form is required by the law as a necessary condition of a contract, the contract shall be deemed to be formed from the moment when the agreement of the parties is expressed in that form.

Where a transfer of a property is required in accordance with the law or the agreement of the parties as a necessary condition of a contract, the contract shall be considered formed from the moment when the relevant property is transferred.

Article 6.182. Contract with conditions left open

The fact that the parties in the course of conclusion of a contract intentionally leave certain conditions to be agreed upon in future negotiations, or mandate them to be determined by third persons shall not prevent contractual relationships from coming into existence.

The validity of a contract shall not be affected by the fact that subsequently the parties reached no agreement on the conditions foreseen in Paragraph 1 of this Article, or the third persons failed to determine them, provided that there are other (alternative) means or ways of rendering those conditions definite.

Article 6.183. A modification clause

A contract formed in writing which contains a clause requiring any modification, supplementation or dissolution of the contract to be made only in writing cannot be otherwise modified, supplemented or dissolved.

A party may be precluded by its conduct from invoking the clause established in Paragraph 1of this Article to the extent that the other party has acted in reliance on that conduct.

A contract concluded in the notarial form may be dissolved, modified or supplemented only in the notarial form.

Article 6.184. Peculiarities of conclusion of public contracts

When in accordance with laws the conclusion of a contract is obligatory for the party to whom the offer was sent, this party shall be obliged within 14 days from the receipt of the offer to send to the other party a notification upon acceptance or rejection of the offer, or acceptance thereof on other conditions (protocol of disagreements).

A party who has sent an offer and received a notification of its acceptance with the protocol of disagreements shall be obliged either to accept the conditions indicated in the notification of acceptance, or to apply to the court for the resolution of the dispute within 14 days from the date of receipt of the protocol of disagreements.

If in accordance with the laws the conclusion of a contract is obligatory for the party who has sent an offer, this party shall be obliged within 14 days from the date of receipt of the protocol of disagreements to notify the other party about acceptance of the conditions indicated in the protocol or about a rejection thereof. In the event where the conditions indicated in the protocol of disagreements are rejected by the party who has received the protocol, or in the event of the latter’s failure to respond within the established period, the party who sent the protocol of disagreements shall have the right to apply to a court for a resolution of the dispute.

If the party for whom conclusion of a contract is obligatory evades the conclusion thereof, the other party shall have the right to apply to a court with a request to obligate the evading party to conclude a contract and compensate for damages caused by the evading.

The time-limits provided for by Paragraphs 1, 2 and 3 of this Article shall apply unless other time-limits have been established by laws or have agreed by the parties.

Article 6.185. Standard conditions of contracts

Standard conditions shall be such provisions which are prepared in advance for general and repeated use by one contracting party without their content being negotiated with the another party, and which are used in the formation of contracts without negotiation with the other party.

Standard conditions prepared by one of the parties shall be binding to the other if the latter was provided with an adequate opportunity of getting acquainted with the said conditions.

In the event where both parties to a contract are enterprises (businessmen), it shall be considered that the other party was provided with the opportunity referred to in Paragraph 2 of this Article if:

1) the party who prepared the standard conditions delivered thereof in written form to the other party before or at the time of signing the contract;

2) the party who prepared the standard conditions informed the other party before the signing of the contract that the contract would be formed in accordance with standard conditions which were accessible to the other party in the place indicated by the party who prepared the standard conditions;

3) a copy of standard conditions was offered to be sent to the other party if requested.

Article 6.186. Surprising standard conditions of contracts

No surprising condition contained in a standard condition contract, i.e. such condition that the other party could not reasonably expect to be included in the contract, shall be effective. Standard condition shall not be considered surprising if they were expressly accepted by the party when they were duly disclosed thereto.

In determining whether a condition is of surprising character, regard must be taken of its content, wording and form of expression.

A party who enters into a contract of adhesion where the standard conditions are drawn up by the other party shall have the right to claim for dissolution or modification of that contract in the event where, even though the standard conditions of the contract are not contrary to the law, they exclude the party’s rights and possibilities that are commonly granted in a contract of that particular class, or exclude or limit civil liability of the party who prepared the standard conditions, or establish other provisions which violate the principle of equality of parties, cause imbalance in the parties’ interests, or are contrary to the criteria of reasonableness, good faith and justice.

In the event of conflict between standard conditions and non-standard conditions, preference shall be given to the latter, i.e. to those which have been individually negotiated by the parties.

Article 6.188. Peculiarities of conditions in consumer contracts

A consumer shall have the right to claim within the judicial procedure for invalidity of conditions in a consumer contract that are contrary to the criterion of good faith.

Conditions of a consumer contract which have not been individually negotiated shall be regarded as unfair if they cause a significant imbalance in the parties’ rights and duties to the detriment of consumer rights and interests, i.e. the conditions which:

1) exclude or limit the civil liability of a seller or service supplier for damage caused by the death of a consumer or impairment of his health, likewise for the damage caused to his property;

2) exclude or limit the rights of a consumer vis-à-vis a seller, service supplier or another party in the event of total or partial non-performance or improper performance by the seller or service supplier of any of the contractual obligations;

3) make contractual conditions binding on the consumer whereas contractual obligations of the seller or service supplier are subject to other conditions, the realisation of which depends solely on the latter’s own will;

4) permit the seller or service supplier to retain sums paid by the consumer where the latter decides not to conclude a contract or refuses to perform it without providing for any rights of the consumer to receive in compensation the sums of the same amount from the seller or service supplier when they unilaterally dissolve the contract;

5) establish a disproportionately high civil liability of the consumer who fails to fulfil his obligation or fulfils it improperly;

6) authorise the seller or service supplier to dissolve the contract unilaterally or rescind it at any time, and no adequate facility is granted to the consumer, or provide the seller or service supplier with the right not to compensate the consumer for the amounts received therefrom before the performance of the contract in the event where the seller or service supplier unilaterally dissolve or rescind the contract;

7) enable the seller or service supplier to dissolve an indeterminate contract without any reasonable grounds without due notification of the consumer about such dissolution;

8) entitle the seller or service supplier with the right to unilaterally extend a fixed-term contract automatically, or establish unreasonably short time-limit for the consumer to express his opinion upon the extension of the contract, or set forth a requirement for the consumer to express his assent or dissent upon the extending of the contract unreasonably early;

9) irrevocably bind the consumer to the conditions with which he had no real opportunity of becoming acquainted before the conclusion of the contract;

10) enable the seller or service supplier to alter the conditions of the contract unilaterally without there being any contractual or sufficient grounds;

11) enable the seller or service supplier unilaterally and without any sufficient grounds to modify any characteristics of the good or services to be provided;

12) entitle the seller or service supplier with the right to unilaterally determine the prices of goods and services at the time of their provision, or allow the seller of goods or supplier of services to unilaterally increase the price without providing the consumer with the right to cancel the contract in the case where the final price is higher than that stipulated in the contract. This provision shall not apply for contracts in respect of securities or other financial documents, or for contracts on alienation of things or provision of services where the price is dependent upon the fluctuation of exchange rates or indexes on the exchange, and is beyond the control of the seller or service supplier, likewise for purchase-sale contracts for foreign currencies, travellers cheques or international money orders expressed in a foreign currency;

13) entitle the seller or service supplier with the right to unilaterally determine whether the goods supplied or services rendered are in conformity with the requirements of the contract;

14) provide the seller or service supplier with the exclusive right to interpret the contract;

15) limit the duty of the seller or service supplier to perform obligations undertaken by their agents, or render such obligation subject to compliance with a particular formality;

16) obligate the consumer to fulfil all his obligations to the seller or service supplier even in the event of total or partial non-performance by the seller or service supplier of their own obligations;

17) provide the seller or service supplier with the right of transferring their rights and obligations under the contract without the consumer’s consent, where such transferring may reduce the guarantees for the consumer;

18) exclude or hinder the consumer’s right to bring action or exercise any other remedy (by requiring the consumer to take disputes exclusively to arbitration, restricting the use of evidence, by imposing on him the burden of proof, etc.).

Any other conditions of a consumer contract may be acknowledged by a court unfair if they conform to the criteria established in Paragraphs 1 and 2 of this Article.

Pursuant to Paragraphs 1 and 2 of this Article, such conditions shall be considered as not having been individually negotiated where the consumer is deprived of the possibility to influence the process of their preparation, in particular where such conditions are determined in advance in the standard contract prepared by the seller or service supplier. In the event where certain conditions in the contract prepared in advance were individually negotiated, the provisions established in the present Article shall apply to other conditions of such contract. The burden of proof that such conditions were individually negotiated shall rest upon the seller or service supplier.

The assessment whether a condition of a contract is unfair shall be effectuated taking in regard the nature of the goods and services stipulated in the contract, as well as other circumstances which existed at the time of contract forming and exerted influence thereupon, likewise any other conditions of that contract or those of other contract it depends upon. The conditions which define the subject-matter of a contract, likewise those related with the conformity between the good sold or a service rendered and the price thereof ought not to be subjected to assessment from the point of view of unfairness (i.e. the provisions of Paragraphs 1 and 2 of this Article ought not to be applied) where they are expressed clearly and understandably.

In the event where a court acknowledges a certain condition (conditions) of a contract not fair, it shall have no effect from the moment when the contract was formed while the remaining conditions of the contract shall continue to be binding on the parties, providing that a further performance of the contract is still possible after the elimination of the unfair condition.

The consumer whose interests are violated by the application of unfair conditions shall be entitled to apply also to institutions for the protection of consumer rights.

The institutions for the protection of consumer rights shall be entitled within the procedure established by laws to effectuate control over the standard conditions of contracts and challenge unfair conditions in the consumer contracts.

CHAPTER XIII

EFFECTS AND FORM OF CONTRACTS

Article 6.189. Effects of a contract

A contract which is formed in accordance with the provisions of laws and is valid shall have the force of law between its parties. The contract shall bind the parties not only as to what it expressly provides, but also to all the consequences deriving from its nature or determined by laws.

The parties may agree that the contract shall apply to their relationships arisen before that contract was concluded.

It may be established by the contract or laws that the obligations of the parties under the contract shall be extinguished by the expiration of the time-limit allotted for the validity of the contract.

The expiry of the time-limit of validity of a contract shall not discharge the parties from civil liability for a breach of that contract.

Article 6.190. Effects of contracts with respect to third persons

1.Upon the death or liquidation of one of the parties, the rights and duties arising from a contract shall pass to his heirs (successors) if it is permitted by the nature of the contract, laws, or the contract itself.

If one of the contracting parties by a contract made in his own name promises that a third person will undertake to perform an obligation or any other action, in the event where the third person fails to perform the obligation or any other action as promised, the contracting party – the promisor – shall himself be bound to perform the obligation or any other action agreed, and to compensate for damages suffered by the other contracting party.

Article 6.191. Contract in favour of a third person

If a contracting party has made a stipulation in a contract for the benefit of a third person, the stipulation shall give both the contracting party and the third person beneficiary the right to demand performance of the agreed obligation unless otherwise provided for by laws or contract, or appears from the essence of the obligation.

In the case of the refusal by the third person to avail himself of the stipulation, the stipulator himself may exercise this right if it is in compliance with laws or the contract and does not contradict the essence of the obligation.

The stipulation for the benefit of a third person may be revoked by the stipulator as long as the third person beneficiary has not declared of his assent to accept it.

If the performance is to be made to a third person only after the death of the stipulator, the latter can revoke the benefit by a testament (will).

A contracting party who is bound to perform an obligation shall be able to set up against the third person beneficiary such defences as he could have set up against the stipulator.

Article 6.192. Form of a contract

The provisions of Articles from 1.71 to 1.77 of this Code regulating the form of transactions shall apply in respect of the form of a contract.

Where in accordance with the law or agreement of the parties a contract must be formed in a simple written form, it may be made either by drawing up one document signed by the parties, or by means of the parties exchanging written communication, telegrams, telephone messages, facsimile communication or any other information transmitted over communication terminal equipment, providing the protection of the text is guaranteed and the signature of the sending party can be identified.

A contract may be formed by the acceptance of an order to be carried out.

Amendments and supplements of a contract must be made in the form in which the contract had to be made, except in the cases where it is otherwise established by laws or the contract.

If the parties have agreed to adopt a specified form for a contract under conclusion, the contract shall be deemed concluded only where it conforms to the form agreed, even though pursuant to the laws such form is not mandatory for the contracts of that concrete class.

CHAPTER XIV

INTERPRETATION OF CONTRACTS

Article 6.193. Rules of the interpretation of contracts

A contract must be interpreted in accordance with good faith. In interpreting a contract, it shall be necessary to seek for the real intentions of the parties without being limited by the literal meaning of the words. In the event where the real intentions of the parties cannot be established, the contract must be interpreted in accordance with the meaning that could be attributed in the same circumstances by reasonable persons in the corresponding position as the parties.

All conditions of a contract shall be interpreted taking into account their interrelation, the nature and purpose of the contract, and the circumstances under which it was formed. In interpreting a contract, regard must also be taken of the ordinary conditions, irrespective of their expression in the contract.

In the event of doubt over notions which may have several meanings, these notions must be understood in the sense most suitable to the nature, essence and subject-matter of the contract.

In the event of doubt over conditions of a contract, they shall be interpreted against the contracting party that has suggested thereof, and in favour of the party that accepted those conditions. In all cases, the conditions of a contract shall be interpreted in favour of consumers and the adhering party.

In interpreting a contract, regard must also be taken of the preliminary negotiations between the parties, practices which the parties have established between themselves, the conduct of the parties subsequent to the conclusion of the contract, and the existing usages.

Article 6.194. Linguistic discrepancies

Where a contract is drawn up in two or more languages and all the language versions are of the equal legal power, in case of discrepancy between the language versions, preference shall be given to the version which was the first to be drawn up.

Article 6.195. Filling in gaps of a contract

Where the parties have left without being discussed certain conditions, which are necessary for the performance of a contract, such gaps in the contract upon the demand of one of the parties may be eliminated by a court in determining appropriate conditions by taking in regard non-mandatory legal norms, the intentions of the parties, the purpose and essence of the contract, the criteria of good faith, reasonableness and justice.

CHAPTER XV

CONTENT OF CONTRACTS

Article 6.196. Kinds of conditions of a contract

The conditions of the parties may be express or implied.

The implied conditions shall follow from the essence and purpose of the contract, the nature of relationships established between the parties, the criteria of good faith, reasonableness and justice.

Article 6.197. Quality of performance of a contract

Where the quality of performance is determined neither by the contract nor by the law, the quality of performance must fall with a quality that is reasonable and not lower than average in the concrete circumstances.

Article 6.198. Price of a contract

1.Where a contract does not fix the price or establish an order for determining the price, the parties shall be considered, in the absence of any indication to the contrary, to have made reference to the price commonly charged at the moment of the conclusion of the contract for such performance in comparable circumstances in the sphere of business concerned, or if such price does not exist, to a reasonable price.

In the event where the price must be determined by one party, and such determination is manifestly unreasonable, it must be substituted by a reasonable price regardless of any other agreement of the parties.

If the price must be fixed by a third person, and if that person does not or cannot do so, the price of the contract shall be deemed to be a reasonable price.

Where the price is to be fixed by reference to the criteria which do not exist or have ceased to exist, or cannot be ascertained, it must be fixed every year and by reference to the criteria which are the nearest equivalent.

Article 6.199. Contract for an indefinite period

A contract for an indefinite period may be cancelled by either party, provided the party gives notice about his intention to dissolve the contract to the other party a reasonable time in advance unless otherwise provided for by laws or a contract.

CHAPTER XVI

PERFORMANCE OF CONTRACTS

Article 6.200. Principles of performance of a contract

A contract must be performed by the parties in a proper way and in good faith.

In performing a contract, each party shall be bound to contribute to and to cooperate with the other party.

The parties shall be bound to use the most economical means in the performance of the contract.

Where according to a contract or its nature, a party in exercising certain actions is bound to make the best effort in the performance of a contract, this party shall be bound to make such effort as a reasonable person would make in the same circumstances.

Article 6.201. Order of performance of a contract

The parties shall be bound to perform the contract simultaneously unless otherwise provided for by laws or the contract, or determined by its nature or circumstances.

Article 6.202. Permission of a state institution

Where certain laws require a permission of a relevant state institution affecting the validity of the contract or its performance, and where the law or the contract does not indicate otherwise, the measures necessary to obtain the permission must be taken by the party situated in the state, the laws of which provide for such permission.

Where the permission indicated in the preceding Paragraph of this Article is required by the laws of the Republic of Lithuania and both parties are situated in Lithuania, the permission must be obtained by the party whose obligation to obtain it is established by the law, except in cases where the law does not establish thereof. In such event, the parties shall be bound to agree by which of them the permission must be obtained.

The contracting party shall be obliged to obtain the required permission or permissions in due time. Expenses of performance of the duty to obtain the obligatory permission shall be borne by the party under this duty unless otherwise established by the contract. This party shall also be bound to give without delay the other party notice of the granting or refusal of the permission.

Article 6.203. Refusal to grant permission

1.If, notwithstanding the fact that the party has taken all measures necessary, permission is neither granted nor refused within the established period, or, where no period has been agreed, within a reasonable time, the parties shall have the right to dissolve the contract.

In the event where the obligatory permission affects only some conditions of a contract, Paragraph 1 of this Article shall not apply if it is reasonable to uphold in force the remaining conditions of the contract.

A refusal to grant a permission affecting the validity of the contract shall cause nullity of that contract. Where the refusal affects the validity of some conditions only, the remaining part of the contract shall be in force if the contract would anyway have been formed even without the invalid conditions.

Article 6.204. Performance of contractual obligations upon a change of circumstances.

1.Where the performance of a contract becomes more onerous for one of the parties, this party shall be bound to perform the contract in accordance with the procedure established in other Paragraphs of this Article.

The performance of a contract shall be considered obstructed under such circumstances which fundamentally alter the balance of the contractual obligations, i.e. either the cost of performance has essentially increased, or the value thereof has essentially diminished if:

1) these circumstances occur or become known to the aggrieved party after the conclusion of the contract;

2) these circumstances could not reasonably have been foreseen by the aggrieved party at the time of the conclusion of the contract;

3) these circumstances are beyond the control of the aggrieved party;

4) the risk of occurrence of these circumstances was not assumed by the aggrieved party.

In the event where the performance of a contract becomes obstructed, the aggrieved party shall have the right to make a request to the other party for the modification of the contract. Such request shall have to be made immediately after the occurrence of obstructions and the grounds on which the request is based indicated therein. The request for modification of the contract shall not in itself entitle the aggrieved party with the right to suspend performance of the contract. Where within a reasonable time the parties fail to reach an agreement on the modification of the contractual obligations, any of them may bring an action into a court. The court may:

1) dissolve the contract and establish the date and terms of its dissolution;

2) modify the conditions of the contract with a view to restoring the balance of the contractual obligations of the parties.

CHAPTER XVII

LEGAL EFFECTS OF NON-PERFORMANCE OF CONTRACTS

Article 6.205. Non-performance or defective performance of a contract

Non-performance of a contract shall be failure to perform any of the obligations arising from the contract, including defective performance and delay of a time-limit of performance.

Article 6.206. Actions of the other party

One party may not rely on the non-performance of the other party to the extent where such non-performance was caused by the first party’s actions or inactivity, or by any other event as to which the first party bears the risk.

Article 6.207. Suspension of performance of a contract

Where the parties are bound to perform a contract simultaneously, either party shall have the right to suspend performance until the other party begins to perform thereof.

Where the parties are bound to perform a contract consecutively, the party who is to perform later shall be able to suspend its performance until the first party has performed his obligations.

The parties shall be bound to exercise the right provided for in Paragraphs 1 and 2 of this Article in accordance with reasonableness and good faith.

Article 6.208. Elimination of defects of performance

The party failing to perform a contract may at its own expense eliminate any defects of performance if:

1) he gives notice without undue delay to the other party indicating the manner and time of elimination of defects;

2) the aggrieved party has no lawful interest in refusing elimination;

3) elimination is effected immediately;

4) elimination is appropriate in the concrete circumstances.

The right of elimination shall not be precluded by a declaration of the other party on the dissolution of the contract.

Upon effective notice of elimination, rights of the aggrieved party that are inconsistent with the performance of the contract shall be suspended until the expiry of the time-limit allotted for elimination.

The aggrieved party may suspend performance of his obligations until the defects of performance are eliminated by the other party, and may also claim compensation for damages.

The aggrieved party shall be bound to cooperate with the other party during the whole period of the elimination of defects.

Article 6.209. Additional period for performance of a contract

In the case of non-performance, the aggrieved party may establish in writing an additional period of time of a reasonable length for the performance and notify the other party about this establishment.

Having established an additional period for performance, the aggrieved party may suspend for this period the performance of his own obligations and claim compensation for damages, though he shall not be able to invoke any other remedy. If the aggrieved party receives notice from the other party that the latter will not perform his obligations within the additional period either, or if upon the expiry of that period the contract has not been performed, the aggrieved party shall be able to set up other remedies available to him.

In the event where delay in performance is not essential violation of a contract, and the aggrieved party has established an additional period of time of reasonable length for the performance, this party may dissolve the contract upon expiry of that period. If the additional period is unreasonably short, it must be extended up to a reasonable length. The aggrieved party may stipulate in his notice upon the additional period that in the case of failure on the part of the other party to perform the contract within the additional period, the contract will be unilaterally dissolved.

Paragraph 3 of this Article shall not apply if the obligation which has not been performed constitutes only an insignificant part of the obligations under the contract of the failed party.

Article 6.210. Interest

1.Where a debtor fails to meet his monetary obligation when it falls due, he shall be bound to pay an interest at the rate of five percent per annum upon the sum of money subject to the non-performed obligation unless any other rate of interest has been established by the law or contract.

Where both parties are businessmen or private legal persons, the interest at the rate of six percent per annum shall be payable for a delay in payment unless any other rate of interest has been established by the law or contract.

Article 6.211. Conditions excluding liability

The conditions of a contract which limit or exclude a party’s liability for non-performance of an obligation, or which permit to effectuate performance in a substantially different manner from what the other party reasonably expected, shall not be valid if such conditions, taking in regard the nature of the contract and other circumstances, are unfair.

Article 6.212. Superior force (force majeure)

A party shall be exempted from liability for non-performance of a contract if he proves that the non-performance was due to the circumstances which were beyond his control and could not have been reasonably expected by him at the time of the conclusion of the contract, and the arising of such circumstances or consequences thereof could not be prevented. A superior force (force majeure) shall not include such circumstances as absence in the market of goods needed for the performance of the obligation, or lack of the necessary financial resources on the part of the party, or violation of their own obligations committed by the contrahents of the debtor.

In the event where the impedimental circumstance is temporary, the non-performing party shall be exempted from liability only for such a period which is reasonable taking in regard the effect of that impedimental circumstance on the performance of the contract.

The party who failed to perform a contract shall be obliged to inform the other party about the arising of an impedimental circumstance foreseen in Paragraph 1 of this Article and its influence on the possibility to perform the contract. In the event where the notice is not received by the other party within a reasonable time after the non-performing party became or should have become aware of the impedimental circumstance, he shall be bound to compensate for damages resulting from the non-receipt of the notice.

The provisions of this Article shall not deprive a party of exercising the right to dissolve the contract, or to suspend its performance, or to require interest due.

Article 6.213. Demand to make a performance

In the event where a party fails to perform his monetary obligation, the other party shall have the right to demand performance in kind.

If a party fails to perform his non-monetary obligation, the other party may demand performance in kind, except in cases where:

1) performance of a contractual obligation in kind is impossible legitimately or in fact;

2) performance of a contractual obligation in kind would be greatly burdensome or expensive for the debtor;

3) the party entitled to performance may reasonably obtain performance from another source;

4) the party entitled to performance does not demand that performance within a reasonable time after he became or should have become aware of the non-performance of the contract;

5) the non-performed obligation is of exclusively personal character.

Article 6.214. Repair or replacement of a defective performance

The right to obtain performance includes the right to demand a repair or replacement of a defective performance, or elimination of defects in performance by other means taking into consideration the provisions of Article 6.208 of this Code.

Article 6.215. Fine for non-performance of the requirement to perform an obligation in kind

1.Where the debtor fails to comply with the judgement of a court ordering the performance in kind an obligation under the contract, the court shall impose a fine upon the debtor.

The amount of a fine shall be established by a court with regard to concrete circumstances of the case. The fine may be imposed in the form of a lump sum payment or in the form of payment of interest on the delayed payments for every day exceeded.

The fine shall be exacted in favour of the creditor. Exaction of the fine shall not release the debtor from the obligation to compensate for damages.

Article 6.216. Change of remedies

In the event where a debtor fails to perform in kind a non-monetary obligation within a fixed time-limit, or where the creditor does not have the right to demand for the performance in kind, the creditor may require other remedies to be invoked.

CHAPTER XVIII

TERMINATION OF CONTRACTS

Article 6.217. Dissolution of a contract

A party may dissolve the contract where the failure of the other party to perform it or the defective performance thereof is considered to be an essential violation of the contract.

In determining whether a violation of a contract is essential, the following conditions must be taken into account:

1) whether the aggrieved party is substantially deprived of what he was entitled to expect under the contract, except in cases when the other party did not foresee or could not have reasonably foreseen such result;

2) whether, taking into consideration the nature of the contract, strict compliance with the conditions of the obligation is of essential importance;

3) whether the non-performance is made of malice prepense or of great imprudence;

4) whether the non-performance gives the aggrieved party the basis to suppose that he cannot believe in the future performance of a contract;

5) whether the non-performed party, who was preparing for performance or was effectuating the performance of the contracts, would suffer significant damages if the contract were dissolved;

In the case of delay in performance, the aggrieved party may dissolve the contract if the other party fails to perform the contract within the additional period fixed.

On any other grounds not established in this Article the contract may be dissolved only within the judicial proceedings resulting from an action of the interested party.

A contract may be dissolved unilaterally in the cases indicated therein.

Article 6.218. Notice of dissolution of a contract

1.Within the existence of the grounds indicated in Article 6.217 of this Code, the aggrieved party may dissolve the contract unilaterally without bringing an action. The party shall be bound to give the other party notice of dissolution in advance within the time-limit established by the contract; if the contract does not indicate such time-limit, the notice of dissolution must be given within thirty days.

2.Where the party who has essentially violated the contract submits an offer to perform the contract before the dissolution thereof, but this offer is belated or otherwise does not conform to the requirements of the contract, the aggrieved party shall lose his right to dissolve the contract unilaterally unless he gives notice to the other party within a reasonable time after he became or ought to have become aware of the offer to perform the contract, or such offer fails to conform to a proper performance of the contract.

Article 6.219. Anticipatory non-performance

If prior to the date when performance falls due it is reasonable to think that there will be an essential non-performance by one of the parties, the other party may dissolve the contract.

Article 6.220. Assurance of due performance

A party who reasonably believes that there may be an essential non-performance by the other party, shall have the right to demand the latter to present an assurance of due performance. The party may suspend performance of his obligations under the contract until the first party has provided the assurance that he will faithfully exercise a proper performance of the contract.

Where the assurance indicated in Paragraph 1 of this Article is not received within a reasonable time, the party demanding thereof may dissolve the contract.

Article 6.221. Legal effects of the dissolution of a contract

Dissolution of the contract releases both parties from the performance of the contract.

Dissolution of a contract shall not preclude the right of claim for damages for non-performance of the contract, as well as the right of claim for penalty.

Dissolution of the contract shall not affect its conditions which establish the procedure of settlement of disputes, nor the validity of any other conditions which, taking in regard to their nature, are to be in force even after dissolution.

Article 6.222. Restitution

Upon dissolution of the contract, each of the parties shall have the right to claim the return of whatever he has supplied the other party under the contract if this party concurrently makes the return of whatever he has received from the latter. If restitution in kind is not possible or appropriate to the parties due to modification of the subject-matter of the contract, a compensation of value of what has been received must be made in money, provided that such compensation does not contradict the criteria of reasonableness, good faith and justice.

If the performance of a contract is successive and divisible, the party may claim restitution only of what has been received after the dissolution of the contract.

Restitution shall not affect the rights and duties of third persons in good faith, except in the cases established in this Code.

Article 6.223. Modification of a contract

A contract may be modified by an agreement of its parties.

On the demand of one of the parties, a court may modify the contract by its judgement, provided that:

1) the violation of the contract committed by the other party amounts to an essential one;

2) in other cases established by the contract or laws.

An action for modification of a contract may be brought only after a refusal of the other party to modify the contract, or if no notice upon proposal to modify the contract is received within thirty days unless a different procedure of modification is established by laws or the contract.

A refusal of one party to perform the contract in part or in whole may be effected only in cases provided for by laws or the contract.

Article 6.224. Nullity of a contract

A contract may be declared null and void upon the grounds of invalidity of transactions established in Book 1 of this Code, likewise on any other grounds established by laws.

Article 6.225. Absolute and relative nullity of a contract

A contract shall be absolutely voidable (null contract) where a violation of the main principles of the Contract law made in forming a contract has conditioned violation not only of the interests of a party of the contract, but also that of the public interests.

A contract that is absolutely null may not be ratified by the parties later.

A contract shall be relatively null (disputable contract) where in contracting it one party acted in good faith, and the declaration of its nullity is necessary only for the protection of the private interest of the party in good faith.

A contract that is relatively null may be ratified by its parties (a party), provided that such ratification results from their express will.

Article 6.226. Partial nullity of a contract

The nullity of a single condition of a contract shall not import the nullity of the entire contract, except in cases if it appears that the contracting parties would not have entered into the contract without the condition affected by nullity.

In the case of a multilateral contract when there are two or more persons bound to perform an obligation, the nullity affecting one of the persons shall not import the nullity of the entire contract unless the participation of that person is necessary for the formation of the contract concerned.

Article 6.227. Right to bring an action for nullity

An action on the absolute nullity of a contract may be brought by any person whose rights and lawful interest are violated by such contract.

The fact of an absolute nullity of a contract and legal effects of this fact may be stated by the court ex officio (on its own motion).

An action on the relative nullity of a contract may be brought by a contracting party in good faith who has sustained damage from entering into that contract, or by a third person in whose interest it is concluded, or by a person whose rights or lawful interests are violated by that contract.

Article 6.228. Gross disparity of parties

A party may refuse from the contract or a separate condition thereof if at the time of the conclusion of the contract, the contract or its condition unjustifiably gives the other party excessive advantage. In such cases, among other circumstances, regard must also be paid to the fact that one party has taken unfair advantage of the other’s dependent position, or of the other party’s economic difficulties, urgent needs, or of the latter’s economic weakness, lack of information or experience, his inadvertence or inexperience in negotiations; regard shall also be taken of the nature and purpose of the contract.

Upon the request of the party entitled to claim for invalidity of a contract or a separate condition thereof on the grounds established in the preceding Paragraph of this Article, a court may revise the contract or its condition and adapt them respectively in order to make the contract or its separate condition meet the requirements of fairness and reasonable standards of fair dealing practices.

The court may modify the contract or separate conditions thereof also on the request of the party who has received a notice of the refusal from the contract if this party upon receiving the notice has immediately informed the other party about his request into the court, and the latter still has not refused from the contract.

PART III

OBLIGATIONS RESULTING FROM OTHER SOURCES

CHAPTER XIX

MANAGEMENT OF THE AFFAIRS OF ANOTHER PERSON

Article 6.229. Duties of a person managing the affairs of another

Where a person voluntarily and without any mandate, instruction or previous assent to act undertakes the management of the affairs of another person, where such management does not fall within his duties, he must manage them in such a way that it conforms to the interests of that other person. The activities of the person managing the affairs of another (manager) shall be governed, mutatis mutandis, by the provisions of Book Four of this Code regulating simple administration of another’s property.

A person who assumes the management of the affairs of another shall be bound to continue the management undertaken until that other person (principal) is in a position to attend to it himself, or until a guardian, curator or an administrator of the property is appointed; if the principal dies, the duty to continue the management shall remain in existence until his heirs take over the management.

A person managing the affairs of another person must as soon as reasonably possible inform the principal of everything that has been done; he must also render in writing a comprehensive receipts, expenditure and loss account.

A person managing the affairs of another must exercise the necessary concern in his management to the extent that can reasonably be required of him, taking in regard the concrete circumstances in which he acts.

The provisions of this Chapter shall not apply to the activities of state and municipal institutions which act in the interests of other persons if the performance of such activity is within the duties of the institutions concerned.

Article 6.230. Management of the affairs of another person against his will

A person who manages the affairs of another person against the latter’s will being aware of this shall be liable towards the person against whose will he has acted in compensation for damages caused by his actions.

The assent or disagreement of a person towards his affairs to be managed by another person shall be of no effect in the instances where an obligation whose performance corresponds to the interests of the society, or the obligation to maintain another person would not be performed in time without such assent, or where effort is undertaken to avert danger threatening a person’s life.

Actions performed by the manager of the affairs of another after he became aware of the person’s, for the benefit of whom the affairs are conducted, disapproval of such actions shall not create any obligations towards the person concerned, neither towards the person performing the indicated actions, nor third persons.

Article 6.231. Managing of the affairs of another in cases of danger

If a person has undertaken the management of the affairs of another in order to protect the latter against real danger to his person or property, the former shall not be bound to compensate for damages inflicted unless he acted intentionally or in gross negligence.

Article 6.232. Ratification of actions

Subsequent ratification of actions of a manager made by the person whose affairs were being managed by the former without a mandate produces the same effects with respect to the management as would have arisen from a contract of mandate or any other contract best corresponding to the nature of the performed actions.

Article 6.233. Compensation of expenses incurred

When the management of the affairs of another person has been rightly undertaken and conformed to the principal’s interests, the principal shall be bound to perform the obligations assumed by the manager in his name. In addition, the principal must reimburse the manager for all the useful and necessary expenses incurred and compensate for the damages suffered by reason of the management of his affairs, irrespective of whether the desired result has been attained.

Expenses incurred in the cases established in Paragraph 1 of Article 6.230 of this Code shall not be compensated.

In the events indicated in Article 6.321 of this Code, compensation of expenses incurred may be claimed in any case.

Where management of the affairs of another person appears to be profitable, the manager, who has conducted the affairs, shall have the right to be remunerated. In the case of disagreement between the parties, the amount of remuneration shall be established by the court taking in consideration the concrete circumstances of the case and being guided by the principles of justice, reasonableness and good faith.

The expenses or damages incurred by a person in managing the affairs of another with the assent of the latter shall be subject to reimbursement in accordance with the rules governing the appropriate nominate contract.

Article 6.234. Return of the received property

A person who has been managing the affairs of another shall be bound to return to the latter the property received by reason of the management, including the fruits and income therefrom.

Upon ratification of the management of affairs by the principal, the manager acquires the right to claim reimbursement of expenses in accordance with Article 6.233 of this Code.

Article 6.235. Legal effects of a transaction formed on behalf and in the interests of another person

Obligations arising from a transaction formed on behalf and in the interests of another person shall be assumed by the person on whose behalf and in whose interests the said transaction is concluded, providing that the latter ratifies the transaction and the other party to the transaction does not contradict to such assumption, or that this other party on entering into the transaction was aware or should have been aware of the transaction being formed on behalf and in the interests of another person.

Where the principal assumes the obligations resulting from a transaction formed in his interests, the rights arising from the said transaction must be likewise transferred to the principal.

Where a transaction in the interests of another person is formed by the manager of affairs of that person on his own behalf, the latter shall be liable towards the third persons for obligations resulting from that transaction. Nevertheless, this provision shall have no effect in respect of the realization of the manager’s and the third persons’ rights connected with the person whose affairs were being managed.

Article 6.236. Supposed managing of the affairs of another

Provisions of this Chapter shall not apply if the management of the affairs of another is performed by a person believing to be managing his own affairs.

CHAPTER XX

UNJUST ENRICHMENT OR RECEPTION OF PROPERTY NOT DUE

Article 6.237. Obligation to return property not due

A person who intentionally or negligently, or in any other manner without any legal grounds obtains something that he could not and ought not to have obtained shall be obliged to return the received benefit to the person on whose account it was received, except in cases provided for by this Code.

The same obligation shall arise where the grounds upon which the property is acquired become subsequently extinct, except in cases established in Article 6.241 of this Code.

The unjustifiably obtained property must be restituted in kind. Where the unjustifiably received property has been lost or damaged, its true value expressed in terms of money that existed at the moment of the property acquisition, as well as any damages caused by subsequent change of the value of the property, must be compensated. The acquirer of the property shall be liable towards the aggrieved person for any deterioration or shortage, including that of accidental character, of the property acquired that occurred after the acquirer became aware or should have become aware of the unjust enrichment, or the reception of a thing not due. Until the moment indicated above, he shall be liable only for his deeds performed intentionally or in gross negligence.

Where a person in good faith sells the benefit acquired in the manner indicated in Paragraph 1 of this Article, he shall be bound to return only the amount received for the property sold.

The provisions of this Chapter shall likewise apply with respect to the obligations the performance of which is not connected with a transference of property but only with a supply of appropriate services, as well as in cases where the claim is connected with the recovery of a thing from illegal possession, or the restitution of performance resulting from an invalid transaction, or the compensation for damage, or the repayments between the parties to an obligation, or with the supply of services to each other.

Article 6.238. The right of a supposed debtor to demand the return of a debt unjustly paid

If a person mistakenly believing himself to be the debtor, has paid the debt he was not bound to pay, he shall be entitled to demand the return of the paid sum from the person who received the payment. The aforesaid right becomes extinct where in consequence of the payment the person has destroyed the document proving the debt. In such event the supposed debtor can claim the paid sum from the true debtor.

Article 6.239. Obligation to return property transferred to a third person gratuitously

Where a person who has received property not due gratuitously transfers the enrichment to a third person, the obligation to return such enrichment shall pass on to the third person.

Article 6.240. Repayments in returning unduly received property

A person, who has received property without due legal grounds shall be bound to return it and reimburse in total the income that he has received or should have received from this property from the time he became aware or should have become aware that the property he received was not due. An interest at the rate of five percent per annum shall be payable for the sum of money received unfoundedly. This interest shall be calculated from the moment when the person became aware or should have become aware of the reception or saving of the money not due.

If the recipient in good faith has accepted property not due by mistake, he also has the right to claim for reimbursement of the necessary expenses incurred for the maintenance of the unduly received property during the period indicated in Paragraph 1 of this Article. Such recipient forfeits the right to claim for reimbursement of the expenses if the person who has the right to recover that property relinquishes that right and leaves the property to the person who has received it unjustifiably.

The person who has accepted property without any legal grounds and who has not guaranteed the maintenance of that property to the extent that a reasonable debtor would guarantee shall be bound to reimburse for the decrease in the property that took place after the recipient became or ought to have become aware of the existence of his obligation to return the property.

Where the nature of the unduly received property is such that it cannot be returned, the value of what was received or performed at the time of the receipt or performance must be reimbursed if the recipient has been enriched, or if he has asked to perform thereof, or if he has consented to perform a counter-action.

Where a transaction is acknowledged null and void, and the performance cannot be evaluated in monetary terms, or the received cannot be returned due to its nature, an action for return or compensation may not be satisfied if this would be contrary to the criteria of good faith, reasonableness and justice.

Article 6.241. Property that cannot be recovered

The following property cannot be recovered as received unduly:

1) property transferred for the purposes of performance of an obligation prior to the expiry of the time-limit allotted for the performance of that obligation unless